STERLING traded below $1.30 during yesterday’s session amid growing expectations that talks between the Conservative Government and Labour aimed at trying to find a Brexit compromise would come to nought.
The pound hit an intra-day low of $1.2985. By 5pm in London, it was off its worst levels of the session at around $1.3014 but was nevertheless down by 0.37 cents on its Tuesday close.
Sterling is already well adrift of the near-$1.50 levels at which it traded on June 23, 2016, ahead of the European Union membership referendum result.
The talks between the Government and Labour follow the defeat on three occasions in Parliament of Prime Minister Theresa May’s draft withdrawal agreement with the EU. Confirmation the UK will take part in the European elections on May 23 has reinforced analysts’ lack of confidence that a compromise will be reached. Speculation mounted yesterday in financial markets that the protracted talks could soon collapse.
Sterling also lost ground against the euro yesterday. The single currency was trading around 86.1p at 5pm in London, up by 0.42p on its Tuesday close.
David Madden, analyst at CMC Markets, said yesterday: “Sterling has come under pressure again as the uncertainty surrounding Brexit, and the lack of clarity in regards to the situation has chipped away at investors’ confidence in the pound. It was confirmed the talks between the Conservative Party and the Labour Party will continue today, but traders aren’t holding out much hope. The pound lost ground against the US dollar and the euro.”
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