Pound Slides on Reports Johnson Will Block Further Brexit Delay

(Bloomberg) -- The pound slumped following reports U.K. Prime Minister Boris Johnson plans to change the law to guarantee the Brexit phase isn’t extended beyond the end of next year, increasing the threat of a no-deal divorce.Sterling slid as much 0.7% to $1.3236 and weakened against all of its Group-of-10 peers in early Asian trading Tuesday. Johnson’s planned legislation will include legal text to prevent the government from delaying the day Britain stops being subject to EU laws, even if no new trade terms have been secured in time, an official said.“The honeymoon of the election is now over and the risks of a potential hard Brexit have been brought forward,” said Kyle Rodda, analyst at IG Markets Ltd. in Melbourne. “Johnson is taking an assertive stance on Brexit and although a hard divorce may still be in the margins for now, there are increasing risk premiums priced into the pound.”Sterling surged as much as 2.7% on Friday after the Conservative Party won an emphatic victory in the U.K. general election, fueling optimism of a speedy resolution to the Brexit deadlock. The pound was 0.4% weaker at $1.3277 as of 8:34 a.m. in Singapore.A Citigroup Inc. index indicated currency funds have almost completely unwound their bearish bets on sterling. Asset managers have also switched to a net long position position from a net short before the vote, data from the Commodity Futures Trading Commission showed.To contact the reporter on this story: Ruth Carson in Singapore at rliew6@bloomberg.netTo contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Nicholas ReynoldsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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