Sterling, having tumbled to six-month lows against the euro, seems to have steadied, although it continues to slide against the dollar.
This morning, the pound was down 0.06% against the single currency, at €1.1160, against €1.1266 a month ago, on 3 June.
It remains markedly lower than the level seen three months ago, on 1 April, when it traded at €1.1697, although seen in the longer, 12-monthly perspective, it is little changed on the €1.1292 at which sterling changed hands a year ago.
Political leadership races
Its worth in dollar terms was down 0.39% this morning, at $1.2648, having traded at $1.2665 a month ago, on 3 June. Three months ago, the pound changed hands for $1.3103 on 1 April, and 12 months ago it was worth $1.3143.
Against the other major reserve currency, the Japanese yen, sterling was 0.08% lower this morning at 136.925 yen, slightly higher than its yen vale a month ago.
Three months ago, the pound was worth 146.025 yen on 1 April, and on 2 July 2018, it traded at 145.715.
Political deadlock in Westminster, the country’s political capital, is weighing on the currency. The ruling Conservative Party is in the process of choosing a new leader, as is its former coalition partner the Liberal Democrats.
Whichever of the final two candidates for the Tory leadership, Boris Johnson and Jeremy Hunt, is successful will then face the problem of getting a Brexit deal through Parliament. So all-consuming has become the process of extricating Britain from the European Union that routine political activity has practically ground to a halt.
Disorderly Brexit a “significant risk”
Meanwhile, concern is mounting on the economic front. On Friday, the Financial Times reported: “The UK economy might stagnate or even contract in the second quarter, economists said on Friday after official data showed stockpiling provided a larger but temporary boost in the first three months of 2019 than previously thought.”
In November, in its most recent Article IV health check for the British economy, the International Monetary Fund (IMF) warned: “Growth is projected to remain around 1.5% going forward, under a baseline scenario that assumes a smooth transition to a broad free trade agreement with the EU. The most significant risk to the forecast is the possibility of leaving the EU without an agreement, which would have a large negative impact on growth, especially if it happens in a disorderly manner and without a transition period.”
It added: “Beyond Brexit, the UK faces a range of other economic challenges, including persistently lacklustre productivity growth, high public debt, rising age-related spending pressures, and a wide current account deficit.”