UK Currency Recovers from Weekend Slump
The UK currency jumped up 0.04% against USD at 1.2976 on Monday. Households expect the Bank of England to lower its interest rates as the British Parliament passed a delay for Brexit.
UHS Markit economist Joe Hayes said the economic and political uncertainty was holding back a possibly more resilient economic growth. The concerns led to increased expectations from UK households to lower interest rates.
Bank of England Governor Mark Carney claimed the planned Brexit deal would help the country’s economy.
If Britain doesn’t withdraw from the EU, short sterling interest futures will edge around one tick lower.
At the same time, the UK currency rose up 0.31% against the Euro at 1.1627. Johnson’s party planned to put the deal to a vote on Monday. The House of Commons speaker, John Bercow, reportedly wouldn’t let the election take place.
In Europe, the EUR/USD pair declined 0.01% to 1.1168. The dollar went under scrutiny when China bought Brazilian soybeans despite their promise to buy American agriculture produce.
UK Parliament Hammers Johnson
The British parliament passed the Brexit delay by 322 against 306 members last week. Still, forecasts claimed the British pound would rally above $1.35 if Johnson got an approval before October 31.
EU’s extension options range from a month to until the end of November. French President Emmanuel Macron claimed Britain held the debate for too long, eliminating the need for further delays.
Johnson’s opposition is still planning changes to legislations needed that could make the deal unacceptable. Reports claim this included an early general election or another Brexit referendum.
Russel Silberston, a portfolio manager at Investec Asset Management Ltd., estimated the possible transition to finish in December 2020. He claimed a free trade deal with the EU was unlikely by then.
If the deal pushes through, the manager claimed the currency could gain at least $1.33.
The UK currency lowered against the dollar when the British Parliament failed to reach their promised final decision last weekend. The pound dropped deeper when analysts showed a Brexit approval was still possible.
