As the FT noted yesterday:
The pound is the worst-performing major currency this month, as renewed concerns about a no-deal Brexit combine with talk of negative interest rates to push the currency to its weakest since March’s dramatic sell-off.
They add a little detail:
Sterling has lost nearly 4 per cent of its value against the dollar in May — putting it at the bottom of the G10 performance table — and has slipped nearly 3 per cent against the euro. The pound hit an overnight low at $1.2073 before regaining some ground to trade at $1.2139 by Monday lunchtime in London. It is the third-weakest major currency this year, with only the New Zealand dollar and Norwegian krone faring worse.
And the reason? It is this:
The pound came under renewed selling pressure at the end of last week after the third round of talks between the EU and UK on their future relationship stalled. Investors have become increasingly concerned about the lack of progress. The UK, which is in a standstill transition period until the end of the year, has previously ruled out an extension and said it would walk away from negotiations if there were no clear outline for an agreement by June.
And although I am not always inclined to agree with bankers this is spot on:
“The last thing the UK and eurozone economies need right now is another negative shock from a no-deal Brexit,” said Lee Hardman, a currency analyst at MUFG Bank in London.
It is true that the very last thing that we need right now, as our economy heads to a likelihood of at least 25% unemployment is another economic shock, but that is exactly what this government is planning to give it.
Brexit was always going to be an economic disaster: it is, after all, designed to be so. The upside was always intended to be the racism it embeds in UK law. The cost was always accepted.
And now that cost will come on top of the chaos we already face.
Only a government led by charlatans and fools would now permit progress on Brexit.
But that, I fear, is what we have.