The British pound tumbled Tuesday to the lowest level against the dollar in almost three years, as the UK faces a possible general election amid Brexit turmoil.
Sterling struck $1.1959 around 0750 GMT, as British prime minister Boris Johnson faces a rebellion by his own lawmakers over his Brexit strategy that could result in an early general election next month.
It was the pound’s lowest level since October 2016, when sterling dived to a 31-year trough at $1.1841 in a so-called ‘flash crash’ just a few months after Britain’s referendum vote in favour of leaving the European Union.
On October 7, 2016, the pound crashed 6.1 per cent against the dollar to hit its lowest level since 1985 before quickly rebounding.
‘Ignoring the flash crash, we are very much in uncharted waters here,’ Neil Wilson, chief market analyst at Markets.com, said on Tuesday.
‘We could feasibly see $1.15 or even $1.10 in the coming weeks if traders decide to move against the pound.’
Around midday in London, the pound recovered slightly to stand at $1.1990.
The euro nudged up from a 27-month low of $1.0926 struck during Asian trading, with the European single currency pressured by expectations of fresh ECB stimulus measures to support the struggling eurozone economy.
The fate of Brexit meanwhile hung in the balance on Tuesday as the UK parliament prepared for an explosive showdown with Johnson that could end in a snap election.
Members of the prime minister’s own Conservative party are preparing to join opposition lawmakers in a vote to try to force a delay to Britain’s exit from the EU if Johnson cannot secure a divorce deal with Brussels in the next few weeks.
The UK leader insists that Britain will leave the EU with or without a deal on October 31.
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