Pound hits $1.30 amid Brexit deal hopes – business live | Business
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After the drama of Brexit Super Saturday, City investors are facing a Murky Monday as they ponder whether, when, and how the UK will leave the European Union.
The pound is under pressure in early trading, falling back from a five-month high, after MPs forced Boris Johnson to (grudgingly) ask for a three-month extension to the 31 October deadline.
Rather than vote for his new deal, parliament decided to withhold support until they’ve had a chance to scrutinise full legislation on the withdrawal agreement.
Having nearly hit $1.30 on Friday night, sterling has shed nearly a cent this morning, dropping back to $1.287 as traders react to this latest uncertainty.
But that’s still 5% higher than two weeks ago, before London and Brussels surprisingly came up with the new deal. And it could easily rally today, if Johnson makes any progress towards driving Brexit through.
The government is pushing for a new Meaningful Vote today, which could show that Johnson has enough support to get his deal through. Another possibility is a vote on the Brexit legislation on Tuesday.
The path ahead remains complicated….
… but some City economist argue that the risk of a no-deal Brexit has fallen.
As Elsa Lignos of Royal Bank of Canada writes:
The numbers are actually shaping up in the government’s favour.
The Letwin amendment has paved the way for more Tory rebels to back Johnson, and having been estimated at a few votes short on Saturday, most expect the govt will reach the magic 320 tomorrow….
She argues that the pound could rally further:
Though government ministers are trying to claim the risk of no deal has increased due to the Letwin amendment, bookies suggest it has done the opposite. We agree and think the kneejerk pound weakness will be bought into.
But with the opposition Labour Party trying to build alliance to push for a softer Brexit than Johnson’s free trade deal, there could be more volatility in the markets this week.
Also coming up
Germany’s central bankers publish their monthly report today, outlining their view of the economic outlook in the EU’s largest economy. Brexit, trade wars and the domestic slowdown may all feature, as Germany teeters on the brink of recession.
Andy Haldane, the Bank of England’s chief economist, is speaking at a conference on “Gender and Career Progression” in Frankfurt
- 11am BST: German Bundesbank publishes its monthly report
- 4pm BST: Bank of England chief economist Andy Haldane gives a speech on diversity.
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