The British Pound Sterling dropped 1.25% in value by 10 am 17 December, over fears that the UK may still face a 'hard Brexit' (an exit from the EU without any trade deal negotiated in advance).
Corporate share prices also fell for companies exposed to the UK market. Unilever, the UK-headquartered consumer goods company, saw its shares fall by nearly 6% after it revised its sales growth projections downwards. After Unilever's profit warning the European STOXX 600 also dropped by 0.6%.
The drops in sterling and shares follow the announcement by UK Prime Minister Boris Johnson that trade negotiations with the EU would end in 2020 come what may. Johnson announced on 17 December that he would seek to legally outlaw any extension to the EU withdrawal bill.
Johnson's Conservative Party won a landslide victory in the UK's general election held on 12 December, which saw an initial boost in share prices of UK-based companies.
Andy Scott, a financial analyst with JCRA, told the AFP:
"By outlawing an extension, it leaves very little time in which to agree on a comprehensive free trade agreement with the EU and means the clock is now ticking down to a firm cliff-edge (no-deal Brexit) next December."
Reuters reports J.P. Morgan's Malcolm Barr as saying:
"So much for pragmatism… We have put the risk of a no-deal end to the transition at 25%, a number we regard as uncomfortably high."
JPMorgan's basket of London-listed companies fell by 2.7%, following a post-election high of 9%.
The slogan of the Tory Party during the general election was "Get Brexit Done."
