The pound has fallen against the US dollar to a new two-year low as markets reacted to a hardening tone from Boris Johnson’s new government over the likelihood of a no-deal Brexit.
At the weekend cabinet minister Michael Gove said a “no-deal is now a very real prospect” while new Chancellor Sajid Javid said there would be extra funding for Border Force officers to focus on Brexit and no-deal preparations.
In response to the news, the pound fell 0.57% against the dollar to 1.2313. Against the euro it was down 0.54% to 1.1070 – the lowest since March 2017.
Since former PM Theresa May announced her resignation at the end of May to Monday, the pound has fallen 3.4%.
Neil Wilson, chief market analyst at Markets.com, said: “The fresh push to the downside follows an escalation in no-deal risks.
“Specifically, the market has reacted to Michael Gove saying that the government is ‘working on the assumption’ of a no-deal Brexit.
“It increasingly looks like the Boris Johnson government is embarking on an overt policy of brinkmanship, specifically designed to take the Nigel Farage Brexit Party out of the equation ahead of a likely election this autumn, and ultimately with the aim of forcing the EU back to the negotiating table.”
Nigel Green, founder and CEO of financial advisory firm deVere Group, said the falling pound will have an impact on holidaymakers wherever they travel.
He continued: “The pound has fallen against the euro every year since the referendum – it is now worth around 15% less than before the vote.”
He added: “Overall, the pound is the worst-performing major currency in the last three months, meaning almost every destination is now more expensive than it was for Brits.”
