Continuing uncertainty over a no-deal Brexit sees the pound drop even further

July 30th, 2019

The markets could be what puts most pressure on Johnson

After a week of almost positive coverage there’s a big cloud hanging over the new government as a result of uncertainty on the currency markets. The pound has slipped sharply against both the US dollar and the Euro.

The effect of this is seen at some airports where the amount you get for a pound is in some cases lower than 1. Although the initial brunt of this will be borne by holiday makers abroad this will increase the cost of everything that has to be imported.

Currency crises can be bad news for governments. John Major never really recovered from the ERM crisis in September 1992 that saw big drops in the value of sterling.

In a way it is surprising that this wasn’t anticipated. Johnson doesn’t have a solution to the hard border in Ireland issue which the backstop was designed to deal with. By ruling that out in such emphatic terms the rookie PM has a problem particularly with his rhetoric on the UK leaving on October 31st.

Mike Smithson