Pound pummelled by stronger dollar, mounting Brexit fears

Will Britain actually extricate itself from the EU

The pound has fallen nearly 2% since the start of August and Otunga warned it is likely to stay under pressure for the rest of the week at least.

Viraj Patel, a currency strategist at ING, tweeted: "Brexit no deal risks for sure one factor but worth also noting seasonality effects (August being a bad month for the pound)".

Against the Euro, sterling has fallen below 90 pence for the first time since November 15th previous year.

Bank of England Governor Mark Carney and UK International Trade Secretary Liam Fox have both warned about the rising likelihood of a no-deal Brexit in recent weeks.

Christophe Barraud, an economist at Paris-based brokerage Market Securities, said: "A lot of companies can't wait for the negotiations outcome in October, so of course are trying to hedge against a drop in the pound".

The pound fell below $1.29 for the first time since September 2017 on Wednesday as fears about a possible no-deal Brexit continued.

The Bank of England has raised interest rates to 0,75%, the highest in Europe, to tame inflation. Few saw the increase as a vote of confidence in the economy with so much political uncertainty ahead.

The GBP/USD is trading at the lowest level since August 31 past year as the United Kingdom cabinet said it will meet in September to prepare plans for a no-deal Brexit scenario.

"Some are thinking in the market that the BoE raised in order to given them ammunition to cut rates in the face of a no- deal", said Neil Jones, head of hedge fund FX sales at Mizuho Bank.

While the Pound Canadian Dollar (GBP/CAD) exchange rate plummeted on Wednesday, CAD's performance was far less dramatic against its other peers as the Financial Times reported Saudi Arabia had begun selling off all Canadian assets it possesses.

Today will see the European Central Bank (ECB) publish its latest Economic bulletin which, with an absence of any other major releases today, could drive momentum in the Euro exchange rate. The pound has lost more than 10 percent since April and is down nearly 15 percent since the Brexit Referendum in June 2016.

So-called risk reversals have risen this week to their highest levels since March 2017, indicating demand for puts has risen versus calls, according to option market pricing for three, six and nine-month periods.

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