Bank of England Governor Mark Carney has warned there is an "uncomfortably high" risk that Britain leaves the European Union with no deal, sending sterling to an 11-day low against the US dollar.
With less than eight months until Britain leaves the EU, the government has yet to agree a divorce deal with Brussels and has begun talking more publicly about the prospect of leaving the bloc without any formal agreement on what happens next.
Carney said a no-deal Brexit was "a relatively unlikely possibility but it is still a possibility", adding that it would also be "highly undesirable".
"I think the possibility of a no deal is uncomfortably high at this point," Carney said in an interview with BBC radio.
"People will have things to worry about in a no-deal Brexit, which is still a relatively unlikely possibility but it is a possibility."
Consumer prices would likely rise in the case of a no-deal Brexit as companies enacted contingency plans to keep supply chains operating, Carney said.
Sterling slipped to a low of $US1.2985 on the comments.
