(Bloomberg) -- The pound fell for a fifth day against the dollar, set for its longest losing run since May, as resurgent anxiety about a no-deal Brexit weighed in thin trading ahead of year-end holidays.
Sterling led declines among major currencies, slipping below its 50-day moving average for the first time in more than two months. While the pound surged after Boris Johnson’s party won a landslide victory in the Dec. 12 election, investor sentiment soon soured as the prime minister was set to use his majority to take a hardline stance in talks with the European Union.
“Conditions are extremely quiet, so it’s difficult to read too much into it,” Jane Foley, head of currency strategy at Rabobank, said on the pound’s drop. “That said, sterling has dropped lower and the market is reevaluating how much Brexit is going to be a feature in the next year. This is just a realignment and a realization that the risk of no-deal Brexit is still a reality.”
The pound fell as much as 0.7% to $1.2905, the lowest since Dec. 2. Its five-day losing streak is the longest since May 17. The currency also weakened by as much as 0.7% to 85.80 pence per euro.
U.K. government bonds gained, outperforming German bunds and U.S. Treasuries, with 10-year gilt yields dropping by four basis points to 0.74%.
“Euro-sterling just seemed to break above a technical level and cable below one,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA. “It may just be continuation of the post-election hangover.”
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