Commenting on Sterling’s response to Boris Johnson’s announcement, Andy Scott, Associate Director at JCRA, said: “Sterling suffered a large sell-off this morning as traders suddenly got notice that Boris Johnson will not let Parliament get in the way of a no-deal Brexit.
“Sterling’s recovery from multi-year lows versus the Dollar and the Euro over the past two weeks has been largely due to hopes that either the EU will agree to replace the Irish backstop with alternative arrangements, or Parliament can block a no-deal. Today’s move by Johnson undermines Parliament’s chances and sets the UK on a hard-Brexit course with arguably few prospects of avoiding such an outcome.
“Sterling continues to reflect market optimism or pessimism over the prospects for a smooth and orderly exit from the EU. The fact that it is towards historic lows against both the US Dollar and the Euro reflect not just the uncertainty over Brexit, but increasingly, the risk that the UK crashes out and suffers a significant economic shock as a result.”