The British pound fell again on Friday as investors trimmed their positions after Brexiteer Boris Johnson moved closer to becoming the next British prime minister.
Sterling has fallen in the past few weeks as the contest to succeed British Prime Minister Theresa May heats up.
Investors are concerned that May’s successor will lead the UK out of the EU with no deal in place on their future trading relations.
They are also worried about how little time whoever takes over will have to try to renegotiate May’s withdrawal agreement with Brussels.
The EU has said the deal is not up for renegotiation before the UK is scheduled to exit on Oct. 31.
Johnson, the face of the official Brexit campaign in the 2016 referendum, on Thursday won by far the largest number of votes in the first round of the Conservative Party leadership contest.
Betting markets give Johnson a 70 percent probability of winning.
The new British prime minister should be chosen by the end of next month. The seven remaining candidates to lead the Conservatives are to be whittled down to two by lawmakers before a postal ballot of the wider party membership is held to select the new leader.
The pound on Friday slipped 0.2 percent ￡0.89 per euro, posting its sixth consecutive week of losses against the common currency, its longest losing streak of the year. For the week, it is down 0.4 percent versus the euro.
Against the US dollar, the pound on Friday slipped 0.4 percent to US$1.2616, down 1.1 percent for the week, with most of the losses following the release of US retail sales data that triggered some buying of the greenback.
Some think sterling’s selloff has gone too far.
“Recent sterling weakness has been overdone, in our view, because markets are pricing in too high a risk of a ‘no-deal’ Brexit in October,” UBS Group AG wealth management said in a note.
UBS said “lingering uncertainty” should keep the pound between ￡0.84 and ￡0.90 per euro, with buying and selling opportunities when the currency nears the edges of that range.
It retained its three, six and 12-month forecasts at ￡0.87 per euro.
Nomura Holdings Inc analyst Jordan Rochester said he is taking profits on a short position on the pound.
“It’s because all the negatives are known: GBP rallying on the smallest of non-events makes us wonder what would happen if we had some ‘positive’ news. We would likely suffer from a position squeeze that for now we don’t want to be a part of,” he wrote.
In Taipei, the New Taiwan dollar on Friday fell against the greenback, losing NT$0.018 to close at NT$31.530.
The NT dollar fell 0.4 percent versus the US dollar from last week’s NT$31.420.
Additional reporting by CNA
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