Sterling was weaker this morning, trading near a five-week low, as lingering worries over Britain’s exit from the European Union drove investors to sell the currency that has steadily lost ground in the past three straight weeks.
Sterling was knocked down late on Thursday after British Foreign Secretary Boris Johnson said he expected formal divorce proceedings between Britain and the EU to begin early next year, and that two years may not be needed to negotiate a deal.
It continued to fall through Friday, losing more than 1 percent to touch $1.2915 – just over a cent higher than the three-decade low of $1.2798 that sterling hit in July, in the wake of June’s shock vote for Brexit.
The comments from Johnson around the timeframe for Article 50 to be invoked and that the Brexit negotiations do not need to take two years have had a detrimental impact on sterling.
Investors worry that an exit from the single market will drag the UK into a recession and blow out Britain’s ballooning current account deficit, already amongst the highest in the developed world at around 5 percent of gross domestic product.
Going forward in the foreseeable future the pound will struggle and further drops are expected.