Sterling falls as Brexit headlines sap demand
Sterling fell on Monday as the latest Brexit headlines sapped investor sentiment, after the British currency gained to its highest in nearly a month last week.
Prime Minister Theresa May’s Brexit strategy means disaster for Britain, former foreign secretary Boris Johnson said, as critics at home and officials in Brussels stepped up their opposition to her plans for how to leave the European Union.
The pound has become more sensitive to the progress of Brexit negotiations, and the latest weakness largely reverses last week’s gains, which came after the EU’s chief Brexit negotiator, Michel Barnier, struck a conciliatory note in his comments.
The British currency was the weakest among the major currencies in early London trading on Monday and is set to fall for a third consecutive day in a market wary of risk.
Latest positioning data indicated investors ramped up their short positions on the British currency. Overall net short bets reached their highest level since early May 2017.
Sterling fell 0.4 percent against the dollar at $1.2892 and a similar margin against the euro at 89.98 pence.
EU’s Barnier told a German newspaper on Sunday that he strongly opposed Britain’s latest proposal.
“If we let the British pick the raisins out of our rules, that would have serious consequences. Then all sorts of other third countries could insist that we offer them the same benefits. That would be the end of the single market and the European project,” he said.