LONDON: Britain's pound slipped by as much as one percent to a one-month low against the dollar on Monday, adding to two straight weeks of losses, amid uncertainty over how the country will help businesses manage its exit from the European Union.
Trade minister Liam Fox said on Sunday Britain may need a transitional agreement to bridge the gap for firms during negotiations with the EU, but it should not "buy back" into too many of the bloc's regulations.
Meanwhile, the Financial Times reported on Sunday that EU Brexit negotiators are insisting Britain agree to its European divorce settlement before Brussels offers any transitional deal.
Prime Minister Theresa May - who first hinted at the idea of a transitional deal last month - was due to make a statement to parliament on last week's EU summit at 1530 GMT on Monday. A survey showed half of British employers think the country's attractiveness as a place to invest and hire will diminish over the next five years as it leaves the EU.
"The pound has been dribbling lower as the EU debate trundles on," Societe Generale currency strategist Kit Juckes said. "The sense you get is that the UK negotiators still want to have their cake and eat it and we may have seen most of the optimism that this is going to go well come and go at this point." Sterling shed as much as 1 percent against the dollar to $1.2360, the lowest since Nov. 23, with the greenback holding close to its highest level in 14 years against a basket of currencies.
The pound shed nearly 2 percent against the dollar over the previous two weeks. It has lost a total of more than 17 percent since June 24, the day after the Brexit vote. "DANGEROUS MONTH" Sterling was down around 0.5 percent against the euro on Monday at 84.14 pence but still remains relatively close to a five-month high of 83.02 pence hit at the start of the month.
The latest data from the Commodity Futures Trading Commission showed investors continued to reduce bets against sterling, with net shorts at their smallest since the third week of September.
"December can be a dangerous month and sterling remains very sensitive to political events," said Simon Derrick, head of currency research at Bank of New York Mellon. "But sterling is not alone in facing political risks and it makes sense that short positions would be coming off."
With May not invited to a meeting between the other 27 EU national leaders after last week's summit, it is unclear what sort of feedback on the process the prime minister will be able to offer parliament on Monday.
She might be further pressed on media reports, quoting the EU's envoy, that it would take up to 10 years for Britain to negotiate a new trade deal with the EU.
Comments
Comments are closed for this article.