The political crisis in the UK may be the final nail in the coffin for the pound. Economists at Commerzbank expect the GBP/USD to remain below the 1.20 level.

Things are getting tight for PM Boris Johnson

“Within two days, 40 MPs resigned from their posts in protest, including Rishi Sunak (finance minister) and Sajid Javid (health minister). Next week, Prime Minister Johnson might face a vote on his post within his own ranks. Things are getting tight for Johnson.”

“We still have on the list bleak economic prospects with interest rates continuing to rise in all likelihood, persistently high inflation, and increasing Brexit trouble (apart from the economic consequences already being felt). All no arguments in favor of the pound.”

“After GBP/USD already broke through the 1.20 mark to the downside at the beginning of the week, I see little chance that the pound will be able to surpass this mark again so quickly. Especially as long as recession fears prevail on the market.”