The British pound slid yesterday on news Prime Minister Boris Johnson will outlaw any extension to a Brexit transition beyond the end of next year, reviving fears of a no-deal divorce.
At one point yesterday, the pound sank by as much as 1.25 per cent against the dollar, while the euro surged almost 1.3 per cent.
The UK currency had surged late last week after Mr Johnson’s governing right-wing Conservative Party clinched a landslide general election victory.
“Concerns about a no-deal Brexit at the end of the transition period are exerting pressure on the pound,” said analyst Michael Brown at foreign exchange firm Caxton.
Those fears also sent London’s FTSE 100 shares index into negative territory yesterday, one day after it had risen sharply.
Mr Johnson won a big majority last week on a promise to take Britain out of the European Union by the end of January, followed by a transition period when London and Brussels negotiate a trade agreement.
European leaders have said that the December 2020 deadline would be too tight to complete a comprehensive deal.
Meanwhile, Eurozone stock markets pulled lower as euphoria faded somewhat over the China-US trade deal.
Most Asian bourses rose following another record-breaking lead from Wall Street, after Friday’s agreement between the world’s top two economies removed immediate uncertainty.