Brexit: Pound falls to new 23-month low against euro as no-deal fears grow

Sterling drops more than 0.5 per cent against single currency as Downing Street’s Brexit rhetoric hardens

The pound slumped to a new 23-month low against the euro on Monday as fears of a no-deal Brexit grew.

Sterling dropped more than 0.5 per cent against the single currency to €1.087, the lowest since September 2017, and was broadly unchanged against the dollar at $1.216.

Boris Johnson’s official spokesperson made one of his firmest avowals yet that the UK will leave the EU on 31 October, regardless of any moves made by parliament.

Asked if Mr Johnson agreed it was too late to stop a no-deal Brexit, the spokesman said: “The UK will be leaving the EU on 31 October whatever the circumstances. There are no ifs or buts. We must restore trust in our democracy and fulfil the repeated promises of parliament to the people by coming out of the EU on 31 October.”

He added: “Politicians cannot choose which votes to respect. They promised to respect the referendum result and we must do so.”

The weakening pound has meant less spending power for millions of holidaymakers heading abroad for their summer breaks.

New research suggests it has also prompted international investors to move money out of the UK and into countries such as Switzerland, Germany and the Netherlands.

The UK’s portion of global equity funds has dropped to 7.9 per cent, according to a survey of 250 international funds conducted by Copley Fund Research.

“We’re seeing a marked shift out of Britain and into mainland Europe by international fund managers,” said Steven Holden, Copley chief executive.

“The weakening pound is certainly the major contributor to the decline in UK stock allocations but it reflects caution over Brexit from an equity perspective too.”

The latest economic data released on Monday delivered few signs for optimism, showing that Britain’s dominant services sector remained tepid in July and confidence about the year ahead dropped to the weakest since March, when the country was on the brink of leaving the EU without a deal.

The closely watched PMI survey improved marginally to 51.4, slightly above the 50 mark that indicates flat activity compared with the previous month.

However, some respondents did report that weaker sterling had boosted overseas demand for UK services.

Surveys of construction firms and manufacturers last week indicated that both sectors were contracting.