Pound Exchange Rate: GBP Falls as Parliament Speaker Blocks Tuesday’s Brexit vote
The pound was softer at the beginning of the new week as investors wait to hear if May will put her EU Withdrawal Agreement before parliament again. They are also attempting to gauge whether she will have the numbers to pass it the bill.
In the recent days, May’s opponents have indicated they would back the exit bill if put before parliament again. However, on Monday John Bercow- the speaker of the House of Commons made a controversial decision.
He blocked the government’s motion to have lawmakers vote on the deal — which was rejected last week — again, saying the government couldn’t bring the same motion twice. The parliament had rejected the previous version of the deal in January.
The Parliament’s speaker has crushed Theresa May’s hope of bringing the same deal back for a vote.
“This is a big blow for the government as it effectively closes off another vote this week unless May can pull a rabbit out of the hat. The Speaker will only allow the third vote if the proposition changes significantly – which seems rather unlikely ahead of the European Council meeting this week,” says Mark Wilson, an analyst at Markets.com.
GBP/USD had spent the day easing off its highs around 1.33 as the government cooled expectations for the MV3.
Wilson of Markets.com said, Bescow’s comment saw the GBP shipping about 50 pips and giving up the 1.32 handle briefly before recovering some poise.
Late on Monday, the pound was -0.40% lower at 1.3230 against the Dollar, while Pound to Euro was -0.48% lower at 1.1680. Both exchange rates have risen sharply this year by 3.9% and 4.9% respectively.
“On the event of a chaotic exit from the EU we see a risk of cable plunging below the GBP/USD 1.15 level and EUR/GBP soaring towards parity,” says Jane Foley, a strategist at Rabobank.
“GBP could be expected to rally on the news that a deal is in place and that a hard Brexit is firmly off the table. The knee jerk reaction could take GBP/USD above the 1.35 level, but profit-taking would then likely kick in,” Rabobank’s Foley writes, in a note to clients.
Pound Exchange Rate: Dollar slides further after worst week since early December
On Monday, the USD built on the previous week’s losses. It lost ground against major rivals as traders looked ahead to the conclusion of a two-day Fed meeting on Wednesday.
The ICE U.S. Dollar Index DXY, -0.12% a measure of the currency against a basket of six major rivals, was down 0.1% at 96.505. According to FactSet, the gauge moved in a tight range in negative territory all day recording its worst week since early December with a 0.7% drop.
On Wednesday, we expect the Fed’s Open Market Committee to be the highlight of the dollar’s week. Investors don’t expect any change in the interest rates, but will closely watch any forecasts on growth and rates when policymakers complete a two-day meeting.
The British pound GBPUSD, +0.1509% slipped to a session low of $1.3184 in response. It bounced back some and last traded at $1.3245, compared with $1.3242.
One euro EURGBP, -0.0701% bought £0.8570, up 0.6%.
The U.K. is scheduled to leave the EU on March 29. So far no trade deal with Brussels is in place, but Parliament has also ruled out to leave without a deal, leaving a request of an extension most likely.
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