Pound falls lower against the dollar and euro

BBC:-  The pound has fallen below $1.29 for the first time in almost a year on continuing worries Britain will leave the EU without a trade deal.

Sterling also hit a nine-month low against the euro, and was down against the yen and Swiss franc.

Bank of England governor Mark Carney said on Friday the chances of a no-deal Brexit were “uncomfortably high”.

On Sunday, international trade secretary Liam Fox put the odds at “certainly not much more than 60-40”.

The falls come despite a rise in UK interest rates, which usually pushes up the value of sterling.

Since the beginning of the month, the pound has fallen 1.7% against the dollar and 0.8% against the euro.

“Some are thinking in the market that the Bank of England raised rates in order to give them ammunition to cut them in the face of a no-deal,” said Neil Jones, a foreign exchange expert at Mizuho Bank. “The next move by the central bank could be a cut rather than another hike.”

Nomura strategist Jordan Rochester added: “We remain bearish on the pound in the short term until the Brexit mess is out the way… ”

A cheaper pound makes imports – and anything bought by foreign exchange, such as holidays – more expensive. It also makes the UK a less attractive place to work for foreign nationals.

But it makes UK exports more competitive. In the first three months of the year, the UK exported a record £87bn in goods to the rest of the world, following a year in which they hit an all-time annual high of £338.9bn

Investors are focusing on a critical meeting in October between Prime Minister Theresa May and EU leaders to try to thrash out the terms of Britain’s withdrawal.

Without a deal, some economists believe the UK and its trading partners would suffer an economic downturn.

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