Economy
THE British pound rose on Monday as investors prepared for parliament to vote on a series of Brexit options, with some hoping that the current uncertainty will end in a softer Brexit than Prime Minister Theresa May’s defeated withdrawal agreement.
May’s deal was voted down for a third time by lawmakers on Friday, sending sterling plunging to below 1.30 dollar.
But the British currency has held at or above that level since, suggesting some investors have priced out the prospect of Britain crashing out of the European Union without a deal and instead expect a long delay to the exit or Brexit to emerge eventually where closer ties are maintained to the trading bloc.
“There is a growing expectation that a (House of) Common’s majority could coalesce around a softer Brexit that includes a custom’s union but she is facing more threats from cabinet members to resign if she decides to pursue a softer Brexit,” MUFG analysts said.
Sterling rose 0.4 per cent to 1.3083 dollar, also finding support from better-than-expected manufacturing survey data.
The pound gained 0.1 per cent to 85.980 pence per euro.
The analysts at MUFG said that while a no-deal Brexit on April 12 remained a risk for the pound, an emergency EU summit on April 10 could – if British lawmakers cannot agree anything this week – see a long delay to Brexit.
Parliament will vote on different Brexit options on Monday and then May could try to bring her deal back to a vote in parliament as soon as Tuesday.
But May’s government and her party remain in open conflict.
Marshall Gittler, a strategist at ACLS Global, said he considered a no-deal Brexit “as a higher possibility, even though it’s officially been ruled out, simply because I don’t see any of the other endings as particularly possible.”
The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index in at a reading of 55.1 for March, above the 51 level forecast by economists polled by Reuters.
The survey showed that factories in Britain stockpiled for Brexit at a frenzied rate last month, pushing manufacturing growth to a 13-month high. (Reuters/NAN)
– Apr. 1, 2019 @ 12:27 GMT |
Tags: Sterling rises as May faces pressure to go for soft Brexit
