Pound takes a hit as political confusion over Brexit goes ever further through the looking glass
Sterling continued its erratic trading path last week sinking to new day’s low against the dollar and amid light participation from dealers who are nevertheless undertaking to unpick the ramifications of last weeks indicative parliamentary votes.After MPs voted against all the various multiple-choice options on how the UK might leave the EU, indeed after Theresa May promised to step down as prime minister to bring Conservative Eurosceptic behind her deal.
The pound even fell 0.8 percent to $1.3072 with whipsawing moves in the currency have become commonplace as investors sit on the fence and stay away from sterling until clarity about the next steps in Brexit emerges. It hovered above its February nadir of $1.3003, which occurred when uncertainties about a no-deal departure were at their apogee. That prospect was at least postponed when parliament voted in favour of a postponement to the process afforded by the EU two-weeks ago. Yet the outcome is that Brexit uncertainty remains elevated as there yet no unequivocal path forward to dodge the so-called ‘no-deal’ Brexit.
Yet the present imbroglio keeps downside risks in play for the pound. And market players can remain optimistic as well that Brexit could be both suspended for longer and lessened if parliament support continues to change in favour of ratifying a permanent customs union or holding a second referendum, which would further serve to reinforce a stronger pound. The latest moves have left sterling up just over 3 percent in 2019.