Be wary of the pounds recent gains
Published on 21.01.2019 09:28

The British pound has started the week in the Asian session with little movement as traders await the latest Brexit movements .

British Prime Minister Theresa May returned from Brussels over the weekend having tried to persuade the EU to reconsider the current Brexit deal which has been brokered between the 2 parties which some say is unbelievable as the EU have steadfastly said they will not budge from the current deal.

Now May must find a ay to convince her Parliamentary collogues to reconsider the deal they strongly rejected last week which many also say will be a tall order.

The the EU is refusing to reopen the Brexit deal, and the question of whether May can persuade opponents in Westminster to support a new deal also has to be questioned following the events of this week. As a consequence markets may be too sanguine about how things will develop from here," says Timothy Fox, Head of Research & Chief Economist at Emirates NBD.

The pound soured last week after the humiliating defeat by the British parliament for Prime Minister May’s Brexit deal as rumours spread that the a majority of Parliamentarians were united in a soft Brexit which would save Britain crashing out of the EU.

There is a chance that the March deadline for Britain to leave the EU could be extended but many say this will only delay the ineviatable.

The thing that has been forgotten here the British Public voted for exactly that, a Brexit with a clean break from the EU with no strings attached and with that in mind, it could eventually come down to delivering the result the people wanted which is a hard Brexit and if this scenario gatheres steam the British pound is in for a rough time

"We understand that so many domestic and international parties in this process don’t want a 'no deal' scenario, but right now we cannot see a clear path towards preventing one. We would assign the scenario which sees Article-50 extended with a path towards new elections the remaining 55%," says Stephen Gallo at BMO Capital Markets.


Andrew Masters

Analyst

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