The pound fell to a 28-month low on Monday and has continued to fall in early trading this morning. It has now fallen below the $1.22 mark against the dollar amid concerns that the UK is going to leave the EU without a deal.
The pound lost 1.3% against the greenback this week and has lost 2.4% since Boris Johnson has become Prime Minister. The understanding in the markets up until now has been that the UK would reach a last-minute agreement with the EU but the hopes of this are now fading.
The popularity of the Conservative party has risen since Johnson took office which has prompted speculation that there would be a general election, which if he won a majority in parliament could allow the Prime Minister to overcome opposition to a no-deal Brexit.
GBPUSD opened at 1.2334 and took sharp losses across the day, hitting a late afternoon low of 1.2216 where it closed. This morning it hit a low of 1.2128
GBPEUR followed a similar pattern, opening at 1.1092 and sliding to close at a low of 1.0967. This morning it reached 1.0887
The US dollar remained near its two-month high on Monday ahead of what is expected to be 0.25% rate-cut on Wednesday. The dollar index was up 0.02% in the afternoon, continuing to ride the high created by better-than-expected GDP data. President Donald Trump has recently been critical of the EU and China, claiming they have intentionally lowered the value of their currencies in order to gain a trade advantage. He has since stated on Twitter that a 0.25% drop in rates is “not enough”.
The European Central Bank is widely believed to be preparing for a rate-cut in September and hit a two-year low on Thursday against the dollar. Yesterday it recovered some of these losses.
EURUSD opened at 1.1121 and fell to a late-morning low of 1.1116 before picking up sharply across the rest of the day to close at a high of 1.1140