21 Oct 2019
The pound climbed higher on Monday due to fresh hopes of Prime Minister Boris Johnson’s Brexit deal being passed over the next few days.
Overnight, sterling was at one point 1.68% down against the dollar. However, it had recovered to $1.30 at 9.30am BST and was 0.2% up against the euro at €1.16.
Monday’s recovery comes after MPs voted in the first Saturday sitting of parliament in 37 years to approve a measure that stopped Mr Johnson’s “meaningful vote” on the deal he negotiated last week with the EU.
The PM is now pushing for the vote to be held early this week – something that could be vetoed by the Speaker John Bercow.
Despite the ongoing deadlock, many analysts are feeling upbeat – which is reflected in the growing strength of the British currency.
Malcolm Barr, economist at JPMorgan, said: “Our best guess at this point is that Johnson will secure a majority for the deal, even if not on Monday, and that attempts to graft a second referendum on to the bill will fail.”
Neil Wilson, chief analyst at Markets.com, noted: “It’s a massive week for the pound and for Brexit.
“The pound’s price action and resilience in the face of the defeat for the PM on Saturday shows the market remains constructive on a deal being agreed, whether it’s now or sometime in the coming weeks.
“No deal risks appear to have diminished but there is, without approval of the deal and approval of all the required steps to make it reality, still a strong chance of no-deal come 31 October.”
For his part, Nigel Green, deVere CEO and founder, observed: “If this deal is ratified, we can expect the pound to jump sharply. It is likely to hit at least $1.35 as the prospect of a no-deal, and/or months of further uncertainty ends.
“Sentiment towards UK stocks will also rally, particularly given the attractive valuations of many UK companies.”
Read today's latest news updates - Violent protests spread in Chile – despite gvmt backdown