In the event of a chaotic Brexit, the pound could fall to $1.10
May 22, 2019 12:21 am
The GBP/USD pair has retreated by more than 4 figures from the highest levels it marked in May. Uncertain situation around Brexit continues to put pressure on the pound sterling, reinforcing the position of the “bears”.
Apparently, market participants, despite the recent announcement by British Prime Minister Theresa May that she is ready to submit a bold new proposal with an improved package of measures to the House of Commons, are still skeptical about the possibility of forming a deal.
The leader of the Labour Party, Jeremy Corbyn, has already said that he will not support T. May’s proposal for Brexit, if it is in many ways the same as the previously rejected three-way version of the divorce agreement.
“The British media report that the May package is a revision of old ideas, and if this is true, then it’s not surprising that the market is skeptical,” said Jane Foley, Rabobank’s currency strategist.
According to the latest polls, Boris Johnson, the ex-foreign minister who resigned in July 2018 due to disagreements on the Brexit procedure, is the best candidate for the post of head of the Cabinet of Ministers instead of T. May.
However, according to ING Bank specialist James Smith, the chances of the new British leader will not differ much from the chances of the current prime minister in making the deal, since the Parliamentary majority still supports the country’s withdrawal from the EU with the obligatory condition of reaching an agreement with the alliance.
According to Bank of America analysts, in the event of a chaotic Brexit, the pound sterling could drop in price to $1.10.
A certain pressure on the British currency is also exerted by the fact that expectations of a rise in interest rates by the Bank of England are significantly reduced. If two weeks ago the market implied a probability of 30% that the rate would increase in December, now the chances of tightening monetary policy in 2019 have decreased to 11%.
The material has been provided by InstaForex Company – www.instaforex.com
The GBP/USD pair has retreated by more than 4 figures from the highest levels it marked in May. Uncertain situation around Brexit continues to put pressure on the pound sterling, reinforcing the position of the “bears”.
Apparently, market participants, despite the recent announcement by British Prime Minister Theresa May that she is ready to submit a bold new proposal with an improved package of measures to the House of Commons, are still skeptical about the possibility of forming a deal.
The leader of the Labour Party, Jeremy Corbyn, has already said that he will not support T. May’s proposal for Brexit, if it is in many ways the same as the previously rejected three-way version of the divorce agreement.
“The British media report that the May package is a revision of old ideas, and if this is true, then it’s not surprising that the market is skeptical,” said Jane Foley, Rabobank’s currency strategist.
According to the latest polls, Boris Johnson, the ex-foreign minister who resigned in July 2018 due to disagreements on the Brexit procedure, is the best candidate for the post of head of the Cabinet of Ministers instead of T. May.
However, according to ING Bank specialist James Smith, the chances of the new British leader will not differ much from the chances of the current prime minister in making the deal, since the Parliamentary majority still supports the country’s withdrawal from the EU with the obligatory condition of reaching an agreement with the alliance.
According to Bank of America analysts, in the event of a chaotic Brexit, the pound sterling could drop in price to $1.10.
A certain pressure on the British currency is also exerted by the fact that expectations of a rise in interest rates by the Bank of England are significantly reduced. If two weeks ago the market implied a probability of 30% that the rate would increase in December, now the chances of tightening monetary policy in 2019 have decreased to 11%.
The material has been provided by InstaForex Company – www.instaforex.com
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