Sterling falls to new three-week low as Brexit nerves build

Tuesday,   12-Feb-2019   03:40 PM (IST)

The British currency fell against the dollar on Tuesday to a new three-week low, as doubts grow about whether Prime Minister Theresa May can convince the European Union to accept changes to her Brexit divorce deal. Time is running out for May to get the EU to amend the Brexit deal, and then get British lawmakers to back the agreement, before Britain is scheduled to leave the EU on March 29. That has heightened fears among financial investors of a no-deal and disorderly Brexit even if the majority of British lawmakers want to avoid one, reversing a recent recovery in sterling. May is expected to tell British lawmakers on Tuesday to hold their nerve over Brexit to force the EU to accept changes to the divorce deal. She is expected to seek parliamentary backing again for her withdrawal arrangement with Brussels by the end of February after losing an earlier bid badly. Investors want certainty, with the political turmoil weighing on consumer and business sentiment. The pound fell 0.2 percent to $1.2833, its weakest since Jan. 21. Versus a broadly weaker euro, sterling held its own and was unchanged on the day at 87.695 pence per euro. Britain’s economy is also suffering from Brexit-related uncertainty - the UK economy last year grew at its slowest since 2012 with momentum sharply worsening in the final three months, data showed.