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UK pound plunges to 23M trough on heightened Brexit fears

UK pound plunges to 23M trough on heightened Brexit fears

Mubasher: The sterling pound (GBP) remained subdued on Monday, having hit its lowest level against the euro (EUR) in 23 months amidst mounting risks of a no-deal Brexit as well as the growing possibility of a general election after October deadline for the UK’s departure from the European Union (EU), according to Reuters.

In addition, the UK pound barely moved away from the 31-month trough against the US dollar recorded last week.

By 1:37 pm GMT, the pound dropped against the euro, with the EUR/GBP pair rising by 0.62% to GBP 0.9192, while the GBP/USD pair declined by 0.42% to $1.1174.

A better than expected services purchasing managers’ (PMI) data failed to support the UK currency, as it cemented worries that Brexit uncertainty and US-China trade tensions are sending the UK economy into recession.

“The likelihood of a no deal exit looks higher now than it has been at any point since 2016 [the Brexit referendum],” UBS UK rates strategy head John Wraith was quoted by Reuters.

UK Prime Minister Boris Johnson and his government repeatedly expressed the willingness to leave the EU on the 31 October deadline, regardless a deal is reached or not.

Over the weekend, headlines pointed that the UK parliament may have a little time to stop a no-deal Brexit.

However, pro-EU lawmakers could seek to topple Johnson’s government by holding a “people versus the politicians” election after the UK exits the bloc in October.

The UK government was bracing for the loss of a confidence vote after the parliament returns from recess next September.

A by-election victory for Liberal Democrats last week left the Tories with a majority of one seat in the parliament, complicating it further for the Conservatives to secure any Brexit-related decision approvals.