Pound recovers after slipping to 2-year low against the dollar after Boris Johnson’s threat of snap election
THE pound has recovered from a two-year low against the dollar after Boris Johnson threatened a snap general election.
Sterling dropped below $1.20 this morning for the first time since January 2017, following a 0.8 per cent tumble yesterday - its biggest decline in three weeks.
It was trading at $1.1964 at 8:30am this morning but by 4pm today it had recovered to $1.2083.
The currency is expected to remain uncertain ahead of today's vote in Parliament, the outcome of which could see a three-month Brexit extension or a no-deal exit more likely.
Yesterday, Mr Johnson promised that if the government is defeated, it will hold a vote tomorrow to approve an early election which would likely be held on October 14.
Some politicians warn that if Britain leaves the EU without a trade agreement then it could weaken the pound.
"The pound is being sold all over the place," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo, "because the political risk has forced us to recognise that a no-deal Brexit is possible.
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"At this point, I see no reason to stay long in sterling."
The pound also fell against the euro but the drop was far less dramatic.
This morning, it fell to 1.0938€ compared to 1.1075€ at 7am yesterday. But it was even lower at the beginning of August when it was a euro to the pound.
The strength or weakness of the pound often changes depending on political decisions, and it's fluctuated ever since the Brexit referendum in 2016.
Sterling jumped against the euro in July after Mr Johnson's landslide victory against Jeremy Hunt to become the Prime Minister.
But in August, sterling hit a 10-year low against the euro after he said that he's prepared to leave the union without a deal if it means sticking to the October 31 deadline.
When it comes to getting your holiday cash, there are ways to make your money go further. We spoke to the experts to find out when is the best time for your to change your cash.
Confused about what's going down in Parliament today? We've put together a complete guide to help you understand.
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