- Markets Insider
- UK International Trade Secretary Liam Fox said in an interview on Sunday that the risk of a no deal Brexit has risen to 60%.
- The pound is falling on Monday morning in response.
- Bad German factory order data isn’t helping either.
- Follow the pound live on Markets Insider.
LONDON – The pound fell to an 11-month low against the dollar on Monday morning amid growing fears of a no deal Brexit.
Sterling is down 0.4% against the dollar to $1.2963 at 10.30 a.m. GMT (5.30 a.m. ET) but fell below mid-July lows earlier in the session to reach its lowest point since last September.
The currency is falling after UK International Trade Secretary Liam Fox said in an interview published on Sunday that the chance of a no-deal Brexit – where Britain leaves the EU without a deal on future trading arrangements – had risen from 50% to 60%.
Fox is a Brexit supporter and was one of three cabinet appointments made by UK Prime Minister Theresa May to appease that faction of the Tory Party.
Fox’s comments to the Sunday Times come after Mark Carney, the governor of the Bank of England, warned on Friday that the risk of a no-deal Brexit is “uncomfortably high.” That warning also sent the pound diving.
The deadline for Brexit is March 2019 and the UK has so far made little progress in agreeing Britain’s future trading relationship with the EU.
Lukman Otunuga, a research analyst at FXTM, said in an email: “With Brexit uncertainty weighing heavily on sentiment and haunting investor attraction towards the Pound, further losses could be witnessed in the near term. The GBPUSD has scope to attack 1.2900 in the near term, if the downside momentum holds.”
Stock and currency markets across Europe are generally downbeat on Monday morning after bad data from Germany. Germany factory orders declined 4% in June, new numbers show, reviving trade war and growth fears. The euro is down 0.06% against the dollar to $1.1563 at 10.45 a.m. GMT (5.45 a.m. ET).
Joshua Mahony, a market analyst at IG, said in an email: “The deterioration in trade relations between the US and the EU has clearly had a substantial impact upon business for Europe’s biggest exporter.
“However, while the DAX is trading in the red in early hours, there is certainly going to be increased hope that the agreement between Juncker and Trump will ensure that this deterioration in June factory orders are an outlier rather than the new status quo.”
Elsewhere, accountant BDO released a survey on Monday saying that the UK service sector has shrunk for the first time since 2010. The sector covers everything from consultancy to waiting tables and accounts for 80% of UK GDP.