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Pound slides under $1.26 for first time since January flash crash

Sterling tumbled below $1.26 on Thursday after the likelihood of a no-deal Brexit increased as Theresa May’s replacement looks likely to push for a hard exit from the European Union.

The pound fell by 0.3% on Thursday against the dollar to below $1.26, the first time the currency slid under that level since the January 3 flash crash.

Sterling also weakened against the euro too, falling by 0.2% to €1.133 after Brussels chief Brexit negotiator Michel Barnier reiterated that Theresa May’s withdrawal agreement is not up for renegotiation.

No-deal Brexit more likely as PM candidates favour hard exit

Sterling suffered a major blow last week May announced she will leave Downing Street on June 7, with the currency falling further this week as her would-be successors look likely to favor a hard Brexit.

Conservative MPs vying to take May’s place are more inclined to pursue a no-deal Brexit after the party suffered significant losses to Nigel Farage’s Brexit Party in the recent EU elections.

As its stands, Boris Johnson remains the bookmakers’ favorite to enter Downing Street, with the MP previously stating that Britain should leave on October 31 with or without a deal in place.

On Wednesday, Johnson was informed that he must appear in court to face allegations that he lied to UK citizens about Brexit by London’s Westminster Magistrates.

Sterling falters amid ongoing political uncertainty

‘The move in the dollar preceded the move in sterling, so it may not be specific to sterling. That said, there was Corbyn’s comments about the referendum which maybe got the market excited,’ BNY Mellon strategist Neil Mellor told Reuters.

‘I think it’s just an uncertain environment for sterling and uncertainty is never good for a currency,’ he added.

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