Sterling on track for sixth week of losses against the euro

The British pound fell again on Friday as investors trimmed their positions after Brexiteer Boris Johnson moved closer to becoming the next prime minister, putting sterling on course for a six-week losing streak versus the euro. Sterling has fallen in recent weeks as the contest to succeed Prime Minister Theresa May heats up.

Investors are concerned that May's successor will lead Britain towards a no-deal Brexit, and they worry about how little time whoever takes over will have to try and renegotiate May's withdrawal agreement with Brussels. The European Union has said the deal is not up for renegotiation before Britain is scheduled to exit the bloc on Oct. 31. Johnson, the face of the official campaign to leave the European Union in the 2016 referendum, on Thursday won by far the largest number of votes in the first round of the Conservative party leadership contest. Betting markets give Johnson a 70% probability of winning.

The seven remaining candidates will be whittled down to two through a series of votes by Conservative Party lawmakers before a postal ballot of the wider Conservative Party membership is held to pick a new leader. The new prime minister should be chosen by the end of July. The pound slipped 0.2% against the euro to 89.115 pence per euro. That puts the British currency on track to suffer its sixth consecutive week of losses against the euro, in what would be its longest losing streak of the year.

Sterling on Tuesday hit a five-month low of 89.325 pence per euro. Some think the selloff has gone too far.

"Recent sterling weakness has been overdone, in our view, because markets are pricing in too high a risk of a no-deal Brexit in October," UBS wealth management said in a note. The Swiss bank said "lingering uncertainty" should keep the pound between 84 pence and 90 pence, with buying and selling opportunities when the currency approaches the edges of that range.

It retained its forecast for euro/sterling at 87 pence per euro over the next three, six and 12 months. Versus the dollar the pound slipped 0.1% on Friday to $1.2666, leaving it down 0.6% for the week. With the U.S. currency weakening on the back of predictions the Federal Reserve will soon cut interest rates, sterling has found some support against the dollar - the pound hit a five-month low of $1.2560 at the end of May but has since recovered slightly.

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