NEW YORK (Reuters) - The British pound on Monday touched its lowest against the dollar since early 2017 after Prime Minister Boris Johnson’s government said it now assumed there would be a hard divorce from the EU, while stocks dipped globally after last week touching their highest in five months.
The dollar index edged up and touched its highest since May 31 as markets counted down to a likely cut in U.S. interest rates this week, with much riding on whether the Federal Reserve signals more cuts will follow.
Sterling fell to a 28-month low of $1.2213 as Johnson’s cabinet prepared the ground for a “no-deal” British exit from the European Union, which many investors say would tip Britain into a recession and inject unwanted uncertainty into financial markets. [GBP/]
The pound was last trading at $1.2216, down 1.32% on the day.
“Political risk is finally getting priced. There is a realization the market had not fully priced the increased chances of a no-deal Brexit,” said Claire Dissaux, head of global economics and strategy at Millenium Global Investments.
The dollar index rose 0.16%, with the euro up 0.03% to $1.1128.
The Japanese yen weakened 0.20% versus the greenback at 108.91 per dollar.
A stronger-than-expected U.S. gross domestic product report on Friday lead some investors to doubt whether the Fed will continue easing this year after its Wednesday meeting.
Interest rate futures are fully priced for a quarter-point rate cut from the Fed, with a 1-in-4 chance of a half-point move.
On Wall Street, tech stocks weighed the most on the S&P 500 in the run-up to the sector’s earnings reports,
