Pound rises above $1.30 with possible Brexit vote in sight

Video Credit: Reuters Studio
Published on October 21, 2019 - Duration: 01:45s

Pound rises above $1.30 with possible Brexit vote in sight

Sterling reached its highest in more than five months on Monday, as more investors rushed to cover short positions on signs that either Prime Minister Boris Johnson's Brexit deal would pass or the Oct.

31 deadline would be pushed back..

Francis Maguire reports.


Pound rises above $1.30 with possible Brexit vote in sight

Britain's pound sterling fell half a percent on Monday but then jumped back to its highest point in five months, as investors get ready for Brexit developments this week.

Prime Minister Boris Johnson should know in the coming days whether his deal will pass through parliament.

If it does - Britain will be on course to leave the EU on October 31st and negotiations over their future relationship begin.

If it doesn't - a three-month Brexit delay is likely on the way.

CMC Markets analyst Michael Hewson.

(SOUNDBITE) (English) CMC MARKETS CHIEF MARKET ANALYST, MICHAEL HEWSON, SAYING: "We will get a vote and it will just about get past, and that's what the markets are pricing in, that's why the pound is only a little bit weaker.

I think if the deal gets passed albeit by a very tiny majority you'll potentially see further upside in the pound." Sterling surged to a five-month high at the end of last week of $1.30 when Johnson struck a deal with the EU.

Bond yields also rose on Monday as the risk of a no deal Brexit - and the trade chaos markets feared would ensue - appeared to fall away.

Benchmark ten year gilt-yields rose 4 basis points on Monday to 0.75%, close to last week's three-month high as traders saw less need to invest in safe havens.

(SOUNDBITE) (English) CMC MARKETS CHIEF MARKET ANALYST, MICHAEL HEWSON, SAYING: "The risks are that this goes on and on.

But I think for me, the floor for the pound is in, the prospect of an imminent no-deal on the 31st of October has been pushed into the future, and I think probably the worst outcome would be a long extension to the 31st of January because the deal doesn't go through." Johnson is pushing for a vote on his deal to happen on Monday or Tuesday.

If it goes ahead, it's likely to be a tight vote.

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