The Pound sell-off continues
The Pound has lost another 1% against the Euro and 1.5% against the Dollar in the last 24-hours, as Brexit sentiment deteriorates. Rising fears of a no-deal Brexit was always on the cards this month as was a Sterling slide, but this has been a very dramatic performance in such a short space of time.
What hasn't helped the £ is the recent developments of an internal market bill, which if passed, means that trade amongst all four home nations will continue to be free from barriers after the transition period. The bill is being labelled as 'breaking international laws', whilst the UK insist it is not overriding the withdrawal agreement, but merely making 'minor clarifications'.
We do have to wonder how much of a bluff this all is, as we have met this kind of pressure many times before. But the bill is said to underline that UK ministers have extra powers to ensure the application of customs and trade rules in Northern Ireland, which is supposed to stay part of the EU's single market under the Brexit withdrawal agreement. If the bill is passed, it surely pushes both sides to the brink of a no-deal Brexit.
The sharp fall has also been driven by a major stock market sell-off this week. Since the pandemic, the Pound has been a 'risk on' currency, which means it is pegged to the global stock markets, due to the UK's reliability on foreign investor capital. There has been a stock rout this week, mainly on US technology shares, after recent record highs. The NASDAQ has lost 10% in just 1-week, which works out at around $1.7 trillion in value.
Volatility is set to continue with tomorrows ECB press conference, Friday's UK GDP and the US' inflation data.