Pound under pressure amid Brexit fears, yen investors await PM vote

The British pound clung to a 1 ½-month low on the dollar on Monday amid fears of a possible no-deal Brexit, while investors in the yen waited for Japan to appoint a new prime minister.

The pound traded at 1.2806 after hitting a 1 ½-month low of 1.2767 on the dollar. Against the euro, it fell to a 5 ½-month low of 92.54 pence before briefly recovering to 92.47.

The pound fell under pressure as Britain is feared to come out of its post-Brexit transition without a trading deal with the European Union.

Last week, Britain explicitly admitted that it could violate international law by ignoring some parts of its post-Brexit treaty with the European Union, prompting the EU chief executive to rebuke London.

The dollar traded at 106.13 on the yen, a level it stuck to in recent weeks.

Japan’s Chief Cabinet Secretary Yoshihide Suga is expected to succeed Shinzo Abe as prime minister. Suga is a longtime lieutenant of Abe and vowed to continue the former prime minister’s policies.

The euro firmed at $1.18455 after three straight days of gains.

The dollar index was little changed at 93.317 as investors await the Federal Reserve’s policy announcement on Wednesday.

The dollar index is down over 4% so far this quarter, with investors expecting further monetary easing from the central bank.