Fear of a “hard” Brexit that would see Britain lose access to Europe’s single market and erect tough barriers to immigration and trade kept sterling under pressure below $1.30 on Tuesday in a week short of an alternative domestic focus for markets.
Scotland’s external affairs minister Fiona Hyslop was the latest to say on Monday that the UK government looked on course for a sharper split, citing initial meetings between Scottish officials and Conservative Brexit minister David Davis.
That added to market sentiment that has pushed sterling back towards the 30-year lows hit in the weeks after the June 23 vote to leave the bloc.
By 0725 it traded just 0.1 percent higher on the day at 86.62 pence per euro, less than half a penny above Monday’s six-week low. It was roughly steady at $1.2987, compared to Monday’s lows of $1.2916.
“Brexit woes continue to plague the market,” said Tobias Davis, head of corporate treasury sales at Western Union in London.
“Talk of a hard landing and varying comments from politicians continue to create uncertainty.”
After hitting lows in July, sterling gained 5 percent versus the dollar by early September, as data showed the post-referendum economy holding up better than had been feared.
But with parliament back from its summer recess, Brexit worries have come back onto investors’ radar and dampened appetite for the currency.
International trade minister Liam Fox, also seen as an important figure in devising Britain’s post-Brexit relations with Europe, speaks to the World Trade Organisation on Tuesday.
The Daily Telegraph reported Fox would put Britain firmly on the path to withdrawing from the EU single market in his speech.