Pound slides on Brexit legal advice

LONDON: The pound sank Tuesday after the government's chief legal advisor declared that the legal risk of Britain being stuck in EU trade arrangements after Brexit fundamentally "remains unchanged".

Sterling, which had been rising after British Prime Minister Theresa May secured last-gasp changes to her Brexit deal, sharply reversed direction following the legal advice from Attorney General Geoffrey Cox.

He said that last-minute new agreements "reduce the risk" of Britain being "indefinitely and involuntarily" held in the Irish border backstop.

However "the legal risk remains unchanged" that Britain would have no legal means of ending the controversial backstop without European Union agreement.

In reaction, the pound slid to $1.3046 from $1.3143 just before Cox published his advice.

The euro jumped to 86.37 pence from 85.75 pence.

"Sterling took a nose dive on the back of the Cox statement," said ThinkMarkets analyst Naeem Aslam.

"It was his opinion which matters the most, now that he has made it clear that the recent deal has no weight, the door is wide open for the sterling to move lower against the dollar."