Sterling collapses as Boris Brexit plan sends shockwave through the market.

Sterling slumped to a 28-month low against the U.S. dollar as Boris Johnson led government increased the heat on Brexit suggesting a “no-deal” Brexit is at its highest probability.

The level of Sterling-Dollar had fallen to 1.2125, a decline of 1.9% on the day. Given GBPUSD closed on June 22, 2016 (the day before the EU referendum) at 1.4708 when the U.K. voted to leave the EU, Sterling has declined by 16.88% against the U.S. dollar since then. This emphasises the point, since Johnson landed the prime minister role on July 24, Sterling is the worst-performing currency in the world. Against a basket of global currencies, the Sterling Index has fallen by 2.13%.

It is apparent that Sterling is highly likely to book further declines as the sentiment in the market would appear to be abandoning any hope that a last-minute deal will be reached come October 31st. Michael Gove, who has been given the responsibility of preparing the U.K. to prepare for no-deal, has said the U.K. government is currently “working on the assumption” of that very outcome.

The Prime Minister is also refusing to sit down for talks with EU leaders until they agree to ditch the Irish backstop from the Brexit withdrawal agreement, despite invitations to meetings from the German chancellor, Angela Merkel, and the French president, Emmanuel Macron. His official spokeswoman said the prime minister had made clear that he wanted to strike a deal, but that there was no point in holding face-to-face talks unless the EU agreed to reopen the agreement.

Boris trip to Scotland yesterday also backfired as the threatening Rally of a No-deal Brexit was met with jeers and boos from the Scottish supporters. The heightening threat of A No-Deal Brexit has bolstered Nicola Sturgeons case for a new vote on Scottish Independence.

The PM today Visits Wales to try and ramp up support.

Economic Calendar

6:30GDP Growth Rate QoQ Prel Q20.30%0.3%
7:00GfK Consumer Confidence AUG9.89.8
10:00Business Confidence JUL0.080.17
10:00Economic Sentiment JUL102.5103.3
10:00Industrial Sentiment JUL-7-5.6
10:00Services Sentiment JUL10.511
10:30Unemployment Rate Q227.80%27.6%
11:15Business Confidence JUL-4-3.7
1:00Inflation Rate YoY Prel JUL1.50%1.6%
1:30Personal Income MoM JUN0.30%0.5%
1:30Personal Spending MoM JUN0.30%0.4%
1:30PCE Price Index MoM JUN0.30%0.2%
1:30PCE Price Index YoY JUN1.70%1.5%
2:00S&P/Case-Shiller Home Price YoYMAY2.30%2.5%
2:00S&P/Case-Shiller Home Price MoMMAY0.50%0.8%
3:00Pending Home Sales MoM JUN0.70%1.1%
3:00Pending Home Sales YoY JUN1.50%-0.7%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.