The pound has sunk against the US dollar following no-deal Brexit fears and the exit of a senior government figure today. Sir Jonathan Jones, the head of the Government Legal Department has resigned amid reported Brexit frustrations. Sir Jonathan is said to be angry over suggestions Prime Minister Boris Johnson is planning to override elements of the Brexit Withdrawal Agreement.
His resignation is the latest in several high profile exits, and now experts are warning the pound could fall yet further as the UK nears the Brexit deadline.
A spokesman for the Attorney General’s Office said: “I can confirm Sir Jonathan has resigned but cannot comment further.”
His is the sixth resignation of a senior civil servant this year as tensions between officials and Downing Street grow.
Sterling has been relatively stable in recent months, however concerns over a deal have returned.
Britain’s Brexit negotiator David Frost said on Tuesday the country was ramping up preparations to leave without a deal.
The pound slipped 0.9 percent to $1.3048 while against the euro it touched 0.90 pence, the lowest since August 20.
Neil Jones, head of hedge fund sales at Mizuho said: “I sense participants are turning bearish on elevated chances of a no-deal Brexit but do not have a short position or hedge on board to reflect the view.
“We should be in store for a further pound selloff.”
“The pound has experienced its sharpest decline since March’s black Monday against the US dollar.
“It’s once again plummeting towards the psychological $1.30 handle against the US dollar, levels not seen in over a month.”
With negotiations beginning today, Mr Clements said ministers face an “uphill battle” as there are “plenty of roadblocks continuing to slow things down.”
He added: “Investors are currently net long on the pound, however this can quickly change as funds cut their losses in a profit-risk trade-off.
“The UK is now faced with two options: concede and let the EU help tow the bus, or simply accept the bus is too heavy to tow.
“The UK SMEs that we are working with are terrified that the end of the furlough scheme will coincide with a depreciating currency, and European licencing woes, with some forced to open European entities in order to keep trading with the bloc.
“This would be the cherry on the cake for UK businesses which have faced one of the toughest years on record.”
UK equity markets are already reeling from the COVID-19 crisis which has set the domestic economy on course for its worst recession in 300 years.
The lengthy lockdown has seen businesses struggle to get back on track, with high streets suffering and the furlough scheme due to come to an end.
Months of closures have taken their toll on businesses across the UK.
Chains like Pizza Express, Costa and Pret a Manger have announced store closures, staff reductions or a mixture of the two in a bid to cut costs.
The FTSE 250 has bounced about 42 percent since the coronavirus crash in March but is still well below its pre-pandemic record highs.