Pound to remain in Limbo
Published on 11.12.2018 13:48

The British pound hit its lowest level in over 20 months yesterday before recovering in today’s trading session on the back of a decision by British Prime Minister Theresa May to delay the Brexit vote and themove threatens to leave the sterling hanging in limbo.

It came as a complete surprise to the market and sources say the decision was taken as May knew she faced certain defeat for her plan which may have sent Britain crashing out of the EU.

There are now three outcomes that are going to drastically affect the pound as we go forward which are a No-deal Brexit,  the possibility of another referendum on Britain leaving the EU or a renegotiation of the current deal as its stands which is the most likely outcome as the EU have said that the deal on the table was their final offer.

"The market has priced in a slightly bigger chance for a no-deal Brexit," said Commerzbank analyst Thu Lan Nguyen.

 "But we will move sideways again until we have a decision of some kind." He added.

A No-Deal Brexit is probably now a real possibility, which will bring much bigger losses for the pound and see the UK fall into recession or at the least an economic downturn that could last for years.

There is also the possibility that Prime Minister May will be forced from office over the Brexit debacle as members of her own cabinet turn against her for the handling of the situation which will throw the UK into a round of political instability which will also have negative consequences for the pound

"But we will move sideways again until we have a decision of some kind." He added.


Andrew Masters

Analyst

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