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Sterling Sink, No Deal Brexit Likely



Sterling sank against the dollar again after the prospects of a “no deal” Brexit.

The currency was down 0.36 per cent against the dollar, close to an 11-month low.

BoE Mark Carney warned last week that the chances of a no deal Brexit were high and urged policymakers to do all things to avoid it. 

Interest rates raised 0.75 per cent
last week, the highest level in nine years, but the increase did little to support the value of the currency.

Sterling is testing $1.2950.The next target is near $1.28, which corresponds with a 61.8% retracement of the rally since the flash crash low in October 2016 at $1.1840.

Markets are certainly becoming increasingly nervous of the Pound. If Britain fails to agree the terms of its divorce with the EU and leaves without a transition agreement,it would revert to trading under World Trade Organization rules. 

Most economists think that would cause serious harm to the world’s fifth largest economy as trade with the EU, Britain’s biggest market, would become subject to tariffs.

Supporters of Brexit say there may be some short-term pain for Britain’s $2.9 trillion economy, but that long-term it will prosper when cut free from the EU.

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