The British Pound has come under more concerted selling pressure over the past 24 hours with a fall below $1.25 against the U.S. Dollar yesterday looking to be a catalyst to the broader sell off in the wider Sterling exchange rate complex.
The $1.25 level is a significant support level for GBP/USD and its breaking therefore poses further potential downside. This would likely spell weakness in a number of other GBP-based currencies.
Sterling continued fighting an uphill battle as persistent political uncertainty, signs of a sharp cooling of the UK economy and technical factors all conspired against the UK currency.
Sentiment towards the UK currency remains poor amidst a significant time of change in UK politics with a new Prime Minister due to be installed by the end of July and little sign of a way out of the current Brexit impasse.
Political uncertainty comes the inevitable currency weakness.
"Brexiteer Boris Johnson has the best cards to succeed Theresa May as Prime Minster. With parliament opposing a hard Brexit, clashes in parliament will increase political uncertainty and weigh down GBP sentiment in the short-term," says David A. Meier, an analyst with Julius Baer in Zurich.
Meanwhile, the UK economy appears to have slowed down sharply through the mid-year period, leading to growing expectations for a potential interest rate cut at the Bank of England in coming months.
"Political uncertainties, sluggish economic growth and a potentially looser monetary policy are the main ingredients of this poisonous cocktail. Mr. Sterling has certainly imagined his summer holiday differently," says Marc-AndrÃ© Fongern, Head of FX Research at MAF Global Forex.