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© BloombergThe pound has slumped almost 3% in the past four days.
The pound slumped for a fourth day as investor concerns over a no-deal Brexit intensified.

Sterling continued its slide versus both the dollar and the euro, with investors pricing a higher chance of the U.K. crashing out of the European Union on Oct. 31. As differences between the two sides increase, Prime Minister Boris Johnson's office said the U.K. will push the EU to negotiate a better divorce deal while preparing the country to leave the bloc without one if he fails.

"The biggest threat to the pound for the remainder of this year is the risk of an accidental no-deal Brexit," Credit Agricole SA strategists, including Valentin Marinov, wrote in a note to clients. "We continue to estimate a long-term fair value for pound-dollar that is consistent with a disruptive Brexit outcome of around 1.20."

Sterling fell 0.6% to $1.2151 as of 4:40 p.m. in London and weakened 0.6% to 91.74 pence per euro. Benchmark gilt yields fell two basis points to 0.64%, while the FTSE 100 Index of stocks retreated from the highest level since August 2018.

The yield on Ireland's 10-year bonds climbed two basis points to 0.17%, a two-week high, as investors sought a higher risk premium on the nation's securities. Citigroup strategists including Jamie Searle recommend selling the debt versus its Belgian counterpart as a hedge against a Brexit no-deal outcome.

The lowest level reached by the pound in the aftermath of the Brexit vote was in October 2016, when a flash crash which some speculated was caused by a mistaken order led the currency to slump as much as 6% to $1.1841 in a one-minute window.

It looks increasingly likely that the pound will revisit that post-Brexit low over the summer, according to Lee Hardman, a currency analyst at MUFG. "Recent price action supports our view that financial markets had not fully adjusted to price in the rising risk off a no-deal outcome."

The market will also have to contend with the Bank of England's policy decision on Thursday, and sterling could face further pressure if the central bank strikes a more dovish tone. Money markets are pricing a more than 60% chance of a 25-basis point rate cut by December on concern that Britain could exit the EU without a deal.
Stephen Gallo, European head of FX strategy at BMO Capital Markets, discusses his outlook for the pound.