SINGAPORE: The British pound plunged further against the Singapore dollar – nearly two weeks after reaching a three-year low – on Tuesday (Jul 30) amid heightened concerns in currency markets about a no-deal Brexit.
The pound fell against the Singapore dollar to as low as S$1.6743 on Tuesday, after it reached a previous three-year low of S$1.6832 on Jul 17.
Sterling has suffered as investors scrambled to price in the possibility that a last-minute agreement to avert a no-deal Brexit may not be realised under new British Prime Minister Boris Johnson.
The pound also slumped against the US dollar on Tuesday, hitting a 28-month low to fall to US$1.2210.
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“The British pound started weakening sharply today, with the market awaking to the reality of a new UK government, its rather combative stance on the current EU-UK Brexit deal and its open remarks on the rising probability of a no deal Brexit,” said ING strategist Petr Krpata.
Krpata said sterling’s woes a “meltdown” and said the decline was unlikely to be over, as “politics should remain the key negative for sterling in the months to come”.
The British government said on Monday it assumed there would be a no-deal Brexit because a “stubborn” EU was refusing to renegotiate their departure.
Johnson also vowed to lead Britain out of the EU on Oct 31 even if there is not divorce agreement, and urged EU leaders to drop their opposition to renegotiating Brexit.
Brussels, however, said it will not reopen the text.
READ: UK PM Johnson tells ministers: We are all committed to leaving EU by Oct 31
Johnson’s bet is that the threat of a no-deal Brexit will persuade the EU’s biggest powers – Germany and France – to agree to revise the Withdrawal Agreement that Theresa May agreed but failed three times to push through the British parliament.
Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain’s economy into a recession, roil financial markets and weaken London’s position as the pre-eminent international financial centre.