The Great Britain pound slumped against all other most-traded currencies today amid concerns that chances for a no-deal Brexit increase. And a hard Brexit can deal a serious blow to Britain’s economy. The currency was trading at the lowest level in about two years.
An official spokesman of Britain’s Prime Minister Boris Johnson said that the PM will not meet leaders of the European Union to discuss a trade deal until they drop the Irish backstop from the Withdrawal Agreement. Johnson pointed out that after three rejections of the Agreement by the Parliament it is clear that MPs are not going to accept the backstop no matter what:
They all know where we are: we canât accept the backstop, it was thrown out three times, the withdrawal agreement as it stands is dead and everybody gets that. But there is ample scope to do a new deal and a better deal.
Analysts speculate that the fact that the Prime Minister made up the government from hard Brexiteers means that he is ready to leave the EU on October 31 without a deal. Indeed, Foreign Minister Dominic Raab said that he thinks it will be easier to reach a deal after a hard Brexit happens:
The prospect of reverting and getting a good deal will be easier after we have left if that is the case. The reason being we do as an independent third country and less subject to effectively the demands of the EU as we are now.
Meanwhile, the Confederation of British Industry warned that neither Britain nor the EU are prepared for a no-deal divorce:
The analysis shows that neither side is ready for no deal on 31 October. While the UKâs preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated. The report also highlights how â contrary to many claims â the EU lags behind the UK in seeking to prevent the worst effects of a no deal scenario. And although businesses have already spent billions on contingency planning for no deal, they remain hampered by unclear advice, timelines, cost and complexity. Larger companies, particularly those in regulated areas such as financial services, have well-thought through contingency plans in place, though smaller firms are less well prepared.
GBP/USD sank from 1.2374 to 1.2216 as of 16:48 GMT today, trading near the lowest level since March 2017. EUR/GBP soared from 0.8988 to 0.9118, trading near the highest level since September 2017. GBP/CHF plunged from 1.2284 to 1.2119, trading near the lowest level since January 2017.
If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.