Sterling sinks to four-month low as Brexit talks break down

Sterling dived to a four-month low on Friday after cross-party Brexit talks collapsed and concern grew about the impact prime minister Theresa May's likely resignation would have on Britain's EU divorce.

Mrs May has agreed to set out a timetable for her departure in early June. That raises the prospect of a Conservative leadership battle producing a more Eurosceptic British leader who could move Britain towards a no-deal Brexit, the worst case scenario for sterling.

“What we’re seeing is the market pricing in a higher probability of an exit without a deal,” Adam Cole, chief currency strategist at RBC Capital Markets, said.

Sterling was down for a tenth consecutive session, touching a four-month low of $1.2733 and falling 0.6 per cent against the euro to 87.61 pence, the lowest since February 15 th.