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Pound plunges against dollar and euro ahead of Brexit Commons clash

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Pound plunges against dollar and euro ahead of Brexit Commons clash

Pound plunges against the dollar and euro amid claims Boris Johnson is set to call a general election after holding emergency cabinet meeting – ahead of Commons clash over Brexit tomorrow

  • Sterling drops more than 0.8% to as low as $1.2067 which is a two-week low
  • UK currency has also declined against euro as much as 0.6% to 90.90 pence
  • Falls come on eve of clash between PM and MPs opposed to his Brexit plans
  • Speculators have cut their short positions but size of the bet is still £5.6billion

By Mark Duell for MailOnline

Published: 10:01 EDT, 2 September 2019 | Updated: 14:34 EDT, 2 September 2019

The pound fell again today to a two-week low against the dollar amid claims that Boris Johnson is preparing to call a snap election.

Sterling dropped more than 0.8 per cent to as low as $1.2067, while it declined against the euro as much as 0.6 per cent to 90.90 pence.

The falls, which will affect Britons going on a late summer holiday, come on the eve of a clash between the Prime Minister and MPs opposed to his Brexit plans.  

The British pound is shown falling against the dollar over the past 24 hours to a two-week low

The pound is shown over the past three years since the Brexit vote took place in June 2016

Kit Juckes, currency strategist at Societe Generale, said: ‘The Prime Minister is willing to resist all attempts to prevent a no-deal Brexit and call an election. 

‘The House (of Commons) will try and stop him. GBP shorts are big, but a bit smaller than they were. A No Deal Brexit is partly, but not wholly priced in.’

Speculators have cut their short positions against the pound – but, at £5.6billion, the size of the bet against sterling remains near its biggest since 2017. 

Downing Street has warned MPs that it would be ‘entirely unreasonable’ for them to attempt to ‘bind the hands’ of Mr Johnson as he seeks to negotiate a new Brexit deal.

The Prime Minister has put rebels in his party on notice that they face losing the whip and being barred from standing for the Tories if they vote against the Government.

Prime Minister Boris Johnson (pictured at 10 Downing Street in London today) has put rebels in his party on notice that they face losing the whip if they vote against the Government

Sterling dropped against the dollar more than 0.8 per cent to $1.2067 in a two-week low

He has called a meeting of his Cabinet this afternoon to consider how to respond to the possibility of MPs seeking to take control of Commons business.

It has sparked feverish speculation about the prospect of a general election being called within days if the Government loses the expected Commons vote tomorrow.

Traders are expecting much more volatility in sterling in the coming months, with implied volatility gauges at or near their 2019 highs. 

MUFG analysts said in a note: ‘The pound will initially attempt to add to its recent gains if opposition MPs are successful in passing legislation in the week ahead. 

‘However, those gains could prove short-lived as it remains unclear how the Government will respond to the request from Parliament.’

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