UK PM May's no-Brexit speech sends pound to 2-month high

The pound also saw support from indications to a possible delay on the Brexit date.

The GBP Source: Bloomberg

Markets reacted positively on Monday night as investors took heed from United Kingdom (UK) prime minister Theresa May’s warning that the Parliament is more likely to block Brexit from happening than to allow the country to leave the European Union without a deal as a signal that a disorderly Brexit is unlikely to take place.

Mrs May gave the speech to factory workers at an unnamed location in Stoke-on-Trent city, England, in a last-ditch attempt to rally support as the UK parliament votes on the deal on Tuesday.

As of 1.42am coordinated universal time (UTC), the pound was at a high of US$1.2912, the highest since November 15th, 2018’s US$1.2986. Speculation on the Brexit deal saw the pound rallying to US$1.2879 on Monday night, up 0.3% within the day.

The pound also saw support from indications to a possible delay on the Brexit date. EU officials had said that they were prepared to push back Article 50 and the formal Brexit date of March 29 until at least July.

The pound rose for the fourth consecutive week in the black for last week, upon news on the a possible Brexit delay and hopes for a delay saw the GBP/USD exchange rate surging by over a cent last week.

Uncertain Brexit hinges on the UK parliament’s decision

The short-term relief is unlikely to sustain for the pound, given the uncertainties to how Brexit will pan out: whether there would be a last-minute deal, a no-deal exit, a new referendum, or would the UK remain in the bloc, remains to be seen.

UK Conservative Party politician Gareth Johnson joined the string of resignations from government officials who opposed Mrs May’s deal, as he announced his resignation from the UK government in under 24 hours from Tuesday’s Brexit vote. Mr Johnson said it was clear to him that no significant change would be made to the agreement before the meaningful vote, stating that he previously had hoped that there would be changes.

However, markets are banking on the unlikely scenario of a hard Brexit, a situation which would see the country crashing out of the bloc without a trade deal in place. The optimism on that stance has helped ease on Sterling volatility.

US dollar weakness helped the pound draw gains

The recent controversy surrounding United States’ (US) longest government shutdown in history had also caused the greenback to face weakness, supporting the pound through the currency exchange.

Trouble continues to brew in the US, and investors have been predicting for Wall Street to weaken in the months to come. At 3.09am Eastern Time on Monday, Dow futures were down by 192 points, projecting a negative open of 237.95 points. S&P 500 and Nasdaq futures were also lower, down by 20.50 points and 66.50 points, respectively.


IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Please see important Research Disclaimer.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.