[UK News] Pound slumps after Boris Johnson hints at Brexit timing

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Pound slumps after Boris Johnson hints at Brexit timing
from Market Watch

The pound resumed its slide on Friday, heading sharply lower after U.K. Foreign Secretary Boris Johnson said he expects his country will start formal Brexit negotiations early next year.

Sterling  traded at $1.2944, down from $1.3078 Thursday in New York. Against the euro, the pound  dropped to €1.1546 from €1.1668.

Speaking with Sky News in New York late Thursday, Johnson said the U.K. government is in talks with its European partners in the "expectation that by the early part of next year, you will see an Article 50 letter." Triggering Article 50 is the action that officially would kick off the U.K.'s exit from the European Union.

"The comments suggest that Britain could be on a somewhat faster track to an EU divorce, and the market has the perception that if there's a shorter time frame for Britain to negotiate a favorable deal, that would increase the risk of a 'hard' Brexit," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Manimbo added that the pound could fall as low as $1.29, a level it hasn't seen in months.

The pound, along with other major currencies, had risen firmly against the dollar earlier in the week when the Federal Reserve left interest rates unchanged near a record low.

The greenback was modestly higher on Friday, with the ICE Dollar Index  up 0.2% to 95.60. The WSJ Dollar Index , a measure of the dollar against a basket of major currencies, rose 0.3% to 86.49.

While the euro  was little changed against the dollar, trading at $1.1208 from $1.1209, there was more action in the Canadian dollar . Following an unexpectedly weak read on retail sales, the U.S. unit fetched C$1.3138, compared with C$1.3045.

"This continues Canada's worrisome trend of economic weakness, which adds weight to the notion that the next move to rates could be down, rather than up," Manimbo said.

The yen  fell slightly, with the dollar trading at ¥100.91 from ¥100.75 late Thursday in New York. Earlier, the dollar moved as high as ¥101.24.

Japan's currency has been volatile this week, after the country's central bank on Wednesday said it would start targeting 10-year interest rates, committing to keep them around zero as part of a new policy framework aimed at steepening the yield curve as it continues its longstanding effort to bolster inflation.