Sterling falls nearly one per cent against the dollar as UK’s constitutional crisis bites
The pound fell 0.9 per cent against the dollar today as the UK’s constitutional crisis reached a new pitch following yesterday’s dramatic Supreme Court ruling.
At 4pm £1 was trading at $1.2373, a fall of more than 0.9 per cent.
The pound also fell 0.37 per cent against the Euro with £1 buying €1.1294.
Read more: Boris Johnson flies into Brexit storm after Supreme Court rules prorogation ‘unlawful’
Sterling’s plunge follows yesterday’s Supreme Court ruling that Prime Minister Boris Johnson’s decision to prorogue parliament was unlawful.
The ruling has led to the recall of parliament today and further clouded the already opaque Brexit process.
“Predicting the ultimate outcome of Brexit remains difficult,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“As a result, the longer-term risk-return outlook for UK equities looks uncertain and we still advise being nimble on sterling.”
Read more: Watch out for the unintended ripples of the Supreme Court verdict
City Index market analyst Ken Odeluga said: “Unsurprisingly, the pound is in the spotlight and under the cosh, with sterling falling hard against the dollar, franc, loonie and yen.”
Taking a longer term view, analysts at Investec Economics argued that the weakness of the government means that a no-deal Brexit on 31 October looks less likely, which could boost sterling.
“The Act of Parliament which requires the government to request a Brexit extension, if no deal is agreed by 19 October, means the risk of a disorderly Brexit has been somewhat suppressed (for now).
“Thus, our sterling forecasts are now for a stronger $1.28 by end-December, whilst we preserve our 2020 forecasts, still looking for $1.31 by the end of next year,” they said.