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UK political tumult keeps pressure on the pound

The UK pound extended its fall in early New York trading, with investors focused on what last week’s election means for the country’s split with the EU.

Sterling was recently off 0.66 per cent on the day at $1.2662 – marking fresh day lows, and far beneath the pre-election levels just under $1.30.

The Conservatives’ disappointing election showing has left investors questioning what the new government’s stance will be on Brexit.

“Risks are now more tilted to the downside for the pound in the near term, due to heightened political uncertainty and the potential for even more complicated Brexit negotiations,” said Lee Hardman, currencies strategist at Bank of Tokyo-Mitsubishi UFJ.

Still, Mr Hardman notes that the potential for a ‘softer’ Brexit is a “reason why the pound has not declined more sharply following the UK general election result”.