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Pound suffers again after Prime Minister's firm stance on Brexit

Boris Johnson
Boris Johnson

By David Chance

The pound has fallen for a second consecutive day, taking the beleaguered currency back to its pre-election levels as financial markets digested Prime Minister Boris Johnson's hardline Brexit stance.

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Mr Johnson was returned as Prime Minister last week in a landslide victory that initially cheered both the pound and UK shares.

But his pledge this week to enact legislation to outlaw an extension of the Brexit transition period beyond next year has again raised concerns of a 'hard' Brexit in which the UK leaves the European Union without a trade deal.

"The pound has been under pressure all week with euro/sterling close to 85p having traded below 83p less than a week ago," said Lee Evans, head of foreign exchange trading and strategy at Bank of Ireland.

The pound was trading at 84.997p to the euro, little change on Monday's close against the single currency which was falling against the dollar once again. The currency lost half a percent against the US dollar, however, to $1.3072.

Mr Johnson's Withdrawal Bill is due to be debated in parliament tomorrow. Despite the Prime Minister's apparent resolution to avoid a Brexit extension, he will be hard pressed to strike a deal in a year and most experts believe the proposed legislation is little more than political 'red meat' for the base.

Jacob Funk Kirkegaard, of the Peterson Institute for International Economics, said: "Faced with hard choices, Johnson could revert to a no-deal Brexit at the end of the transition period, but his aversion to doing so in October 2019 suggests otherwise."

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