Cascading Pound could have serious GeoPolitical Implications
The Pound (Sterling/GBP) dropped yesterday to a 28 month low against the Dollar (USD) dipping to 1.1% to $1.2242 and €1.1004 (EURO) respectively, as new PM Boris Johnson flaunted his Brexit “War Cabinet” and ramped up the rhetoric, making the Pound the most volatile currency in the G-10.
On top of the Brexit malaise the Pound is also vulnerable to the Bank of England adding further pressure to the currency when it meets later this week when they are expected to indicate that they are “unlikely” to increase interest rates in the foreseeable future. However some very smart money is betting that a Brexit deal will be brokered albeit, LastMinute.com.
Sterling dropped as much as 0.8% against the dollar to 1.2119 on Tuesday, extending Monday’s 1.3% decline. The cost of insuring against volatility in the pound over a three-month period has climbed to the highest among the G10 currencies as concerns grow that U.K. Prime Minister Boris Johnson will indeed opt for a no-deal Brexit.
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