Currencies News

Pound Skids Below $1.20 As Election Warning Contributes to Brexit Woe

Sterling plunged below $1.20 on Tuesday to its lowest in three-years, as Prime Minister Boris Johnson’s tacit ultimatum to legislators to support him on Brexit or face an election sent traders scrambling to drop British assets.

The pound, which has lost 20% of its value since Britain voted to leave the European Union in 2016, plunged to as low as $1.1959, down almost 1% on the day.

Banning an October 2016 ‘flash crash’ when sterling immediately tanked to as low as $1.15, the British currency has not usually traded at these levels since 1985.

Investors in London stated it was the heightened ambiguity that was panicking them.

Many fear that Britain will either crash out of the bloc on Oct. 31 without a transitional contract to ease the divorce or face a parliamentary election that would sow more unpredictability at a time when the country’s economy is already declining.

The battle over Brexit is reaching a crescendo this week. Johnson on Monday implicitly warned legislators he would seek an election if they tied his hands on Brexit, ruling out ever allowing a further delay to Britain’s departure from its largest trading associate.

Council members will vote on Tuesday on the first stage of their plan to dam Johnson from pursuing a no-deal Brexit ahead of the Oct. 31 deadline.

Banks raised their views for the likelihood of a no-deal Brexit. UK domestic-focused shares such as housebuilders slipped on concerns about a blow to the British economy.

Against the euro, the pound’s slump was far more contained on Tuesday, falling to a two-week low of 91.47 pence before recovering considerably.

Nina Sanders

By Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.