Loading...

Home pages - full list (A-Z)

Pound at 20-Month Low After PM Cancels Big Brexit Vote; UK Prepares for No-Deal

The British pound was hammered on Monday following news that a House of Commons vote on the proposed EU withdrawal agreement has been cancelled. Against the US dollar, sterling fell to its lowest level since April 2017.

#News #GBP #USD
Email share     Facebook     LinkedIn    Twitter

Relative to the dollar, the pound slumped to levels as low as $1.2506 on Monday afternoon following news that No 10 has cancelled a hugely important House of Commons vote on Theresa May’s proposed Brexit deal.

British MPs had been scheduled to vote for or against May’s much-derided deal on Tuesday, but in the lead-up to the vote, again and again members of her own Conservative party, together with those from Labour, the SNP and DUP, had publicly stated that the Prime Minister would not have their support.

As she addressed Parliament on Monday, May admitted her belief that the deal would have been rejected should the vote have taken place. By cancelling now, May extends her own political career, for a few more weeks at least.

Mrs May has said that prior to a new vote, which might now come as late as January-21, she will go back to Brussels and attempt to negotiate a termination date for any Irish “backstop”—the most contentious feature of her current deal.

Political uncertainty is among the chief causes of currency weakness, so it shouldn’t be to anyone’s surprise that sterling is where it now is. Britain’s currency has lost 12 percent of its value against the dollar since highs posted in April, and nearly 18 percent since the UK’s EU referendum in June 2016; it suffers, too, against the rest of G10 FX.

Sterling’s fate remains inextricably tied to Brexit developments, so the obvious question becomes, will the EU accept a time-limited backstop? The short answer, per the New Statesman’s Patrick Maguire, is “no,” and that’s hardly music to the ears of sterling holders given recent warnings from the Bank of England that no-deal will bring about a currency crash.

Also not confident of a successful renegotiation is May herself. In Monday’s address, she admitted that the government would be stepping up preparations for no-deal.

 

Further Reading

 

AUD/GBP Between a Rock and a Hard Place – USD Strength

AUD/GBP versus AUD/USD and GBP/USD

Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 27 Aug, 2019

Australia Cuts Interest Rates to Record Low

RBA Australian dollar AUD currency news and forecasts

The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.

Last update: 14 Aug, 2019

GBP’s Bright Start to the Year Is a Distant Memory

The British pound was the worst-performing major currency in the April-June period and remains “impossible to forecast” amid a Tory leadership battle that might force “no deal” or a general election.

Last update: 30 Jun, 2019

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

Get a Better FX Deal when you Send and Spend Abroad.

 

Do NOT follow this link or you will be banned from the site!