Skip to content

News

Pound set for biggest monthly rise in a decade as no-deal Brexit fears fade

The pound rose today and could score its biggest monthly rise in more than a decade as the combination of a weak dollar and the falling risks of Britain leaving the European Union without a deal has fueled demand.Ā 

The immediate catalyst for the poundā€™s gains was a cautious US Federal Reserve who kept the door open for further policy easing after cutting interest rates for the third time this year.

But the broader base for the poundā€™s rally this month was some progress on the Brexit deadlock.

British Prime Minister Boris Johnson, who has failed to deliver on his ā€œdo or dieā€ promise that Britain would leave the EU on October 31, secured agreement for an election on December 12 after the EU granted a third delay to Brexit.Ā 

The Conservative Party holds around an 8-point lead over the opposition Labour Party, according to a Survation poll conducted by the Daily Mail.Ā 

In its latest updated forecasts, Morgan Stanley and Goldman Sachs put the risk of a no-deal Brexit at a low 5% and assign a 75% probability of a deal followed by the likelihood of 20% for Britain opting to stay within the European Union.

Against the dollar, the pound rose 0.3% at $1.2941 and closing in a five-month high above $1.30 hit last week.Ā Sterling has gained 0.2% against the euro.Ā 

The pound has strengthened more than 5% against the dollar so far this month, its biggest monthly rise since May 2009, according to Refinitiv data. Ā 

The Fed lowered its policy rate to 1.5%-1.75%, but dropped a previous reference in its statement to ā€œact as appropriateā€ to sustain the economic expansion.Ā 

Article Source: Click Here