Pound falls against both dollar and euro as Boris Johnson continues tough stance
The pound has faced renewed selling pressure amid rising fears that Boris Johnson could walk Britain out of the EU without a deal, raising the prospect of rising prices for consumers and hitting holidaymakers in the pocket.
Sterling continued to slide on the foreign exchanges on Tuesday after tumbling the most in a single day since November on Monday, taking the currency to the lowest level for 28 months.
The pound was down by 0.5% against the US dollar and the euro on Tuesday as the selling continued overnight on Asian markets and into the morning session in London. The currency was trading at $1.2153 and €1.0905 on the money markets but there were reports of sterling being offered at parity with the euro at bureaux de change at major airports.
Neil Wilson, the chief market analyst at Markets.com, said sterling was facing “relentless selling pressure”, adding: “The reasons behind the slide are well trodden but worth noting again: increased risk of a no-deal Brexit as the new government regime pivots squarely towards making no-deal a reality.”
Economists warned the latest slide in the value of sterling could drive up the cost of living for British consumers. When the pound falls, inflation begins to rise as imported goods become more expensive.
When sterling plunged straight after the EU referendum in 2016 inflation rose to the highest levels in five years, putting pressure on household budgets and harming the high street as retail spending slowed.
Victoria Clarke, an economist at the City bank Investec, said: “If we look back to the sharp drop in the pound after the Brexit referendum there were some pretty sizeable consequences for inflation down the line. It was material and squeezed household cash positions quite significantly.
“If the pound hangs around at these levels for a few months we would start to see rising inflation.”
Nearest tube – Elephant & Castle underground station (Northern and Bakerloo lines).
Nearest Railway Station – Elephant & Castle
Buses from Elephant and Castle – ask bus driver for Burgess Park. Bus numbers: 12, 171, 148, 176, 68, 484, 42, 40, 45