Pound recovers on defeated Brexit deal

Written by Oliver Wade
16/01/2019

The pound is gaining ground following the defeat of Theresa May’s Brexit deal in the House of Commons, rising above $1.28 after falling below $1.27 in the lead up to the vote.

However, further movements in the sterling could be provoked with news and reactions still flowing in.

Hargreaves Lansdown senior analyst Laith Khalaf commented: “The pound has become the market’s Brexit barometer, and it’s been a volatile night as currency markets digest proceedings in Westminster.

“Sterling gained ground following the vote, but only recovered ground it lost earlier in the day. Markets think a softer Brexit may start to take shape now the vote has failed, as parliament gains greater control of the process. This is a change in dynamic, as previously government failures have heightened expectations of a hard Brexit, and have weighed sterling down.”

Khalaf highlighted that, still, there is “no certainty to be had” with further swings in sterling can be expected as events develop.

“The reality is there’s no correct price for sterling until there’s greater resolution on the direction of Brexit, what we have right now is a middle ground between competing possibilities. Assuming Brexit does resolve itself one way or another, the pound will ultimately find a new level, but it’s not going to be a smooth journey,” the senior analyst concluded.

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