SINGAPORE: The British pound on Tuesday (Jul 30) plunged further against the Singapore dollar - nearly two weeks after reaching a near three-year low - amid heightened concerns in currency markets about a no-deal Brexit.

The pound fell against the Singapore dollar to as low as S$1.6598 in intra-day trade on Tuesday, before rising back up to S1.6674, slightly lower than Monday's S1.6740.



This came after it closed at S$1.6832 on Jul 17, which was its lowest against the Singapore dollar since October 2016.

Sterling has suffered as investors scrambled to price in the possibility that a last-minute agreement to avert a no-deal Brexit may not be realised under new British Prime Minister Boris Johnson.

It crashed through trading barriers, falling to an intraday low of US$1.2120 in shallower overnight Asian trade, the lowest since March 2017.

The pound has lost 3.6 cents since Johnson was named Britain's new prime minister a week ago.





Against the euro it hit its lowest since September 2017, and by 1145 GMT was trading around 91.605 pence, down 0.4 per cent on the day.

It lurched 1 per cent lower against the Japanese yen to the lowest since November 2016, falling past 132.28 yen, which it plumbed during a "flash crash" episode in January. Having hit a low of 131.59, it traded around 131.98 yen per pound.



READ: Scotland's Sturgeon thinks Johnson is pursuing a no-deal Brexit



The British currency has shed around 2.4 per cent of its value since Johnson took over last week and is headed for its worst monthly performance since October 2016, not long after the country voted to leave the EU. Sterling traded as high as US$1.32 in May.

"The tail risk of either a general election or no-deal Brexit were seen as a lower probability earlier but are increasingly getting priced in as a base case scenario," said Supriya Menon, a strategist at Pictet Asset management.

There seemed to be less room for compromise between London and Brussels, she added.

This week's selloff shows little sign of abating, with options markets implying more pain in store.

The British government said on Monday it assumed there would be a no-deal Brexit because a "stubborn" EU was refusing to renegotiate their departure.

Johnson also vowed to lead Britain out of the EU on Oct 31 even if there is not divorce agreement, and urged EU leaders to drop their opposition to renegotiating Brexit.

Brussels, however, said it will not reopen the text.

Johnson's bet is that the threat of a no-deal Brexit will persuade the EU's biggest powers - Germany and France - to agree to revise the Withdrawal Agreement that Theresa May agreed but failed three times to push through the British parliament.



Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain's economy into a recession, roil financial markets and weaken London's position as the pre-eminent international financial centre.



Supporters of Brexit say that while there would be some short-term difficulties, the disruption of a no-deal Brexit has been overplayed and that in the long-term, the United Kingdom would thrive if it left the European Union.



"Sterling isn't cheap enough to buy until EUR/GBP is the other side of 0.95 and there isn't the faintest glimmer of positive news on the horizon," said Kit Juckes, a currency strategist at Societe Generale, calling the pound "parachute-less".

