STERLING remained on the ropes yesterday, having sunk further against the dollar and euro overnight, as fears of a no-deal Brexit dominated.

The pound sank to about $1.2013 in the early hours of yesterday morning – a fresh 31-month low against the greenback.

Sterling also tumbled against the euro, with the single currency climbing to around 93.24p. This was the euro’s best level against the pound since October 2009, with the exception of a sterling “flash crash” in autumn 2016.

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The pound had come under further intense pressure on Friday when official data revealed UK gross domestic product had dropped by 0.2 per cent in the second quarter. This was the first such contraction since 2012, and the figures fuelled recession fears.

By 5pm in London, sterling was trading around $1.2069, down by 0.14 cents on its Friday close. The euro was trading around 92.92p, up 0.07p on its pre-weekend close, after sterling crawled its way off its worst levels against the single currency, helped by the impact of political ructions in Italy.

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No-deal Brexit fears have been fuelled in recent weeks by Boris Johnson’s ascension to Prime Minister. Mr Johnson and Cabinet colleagues have highlighted their determination to take the UK out of the European Union by October 31 – with or without a deal.

Craig Erlam, senior market analyst at foreign exchange group Oanda, flagged a “wild ride” for the pound “as we’re frequently reminded just how serious Boris and his team are about no-deal”.

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He added: “I can’t imagine much will change here in coming weeks as the new PM desperately seeks to avoid the mistakes of his predecessor and ensure the EU believes him when he says no deal is better than a bad one.

“Unfortunately for him, the EU is showing no signs of backing down on this and time is fast running out which doesn’t bode well for the pound as it eyes up 1.20 against the dollar.”