AFP, London :
The pound has experienced a chaotic week in reaction to Brexit’s twists and turns, with large swings against rival currencies a daily occurrence. Over the week the pound has jumped 1.8 percent against the dollar and 1.0 percent versus the euro to trade at around $1.3250 and 1.1700 euros respectively Friday.
The rally illustrates markets’ surprising confidence of there being an eventual smooth EU exit for Britain despite political unrest over sealing the country’s divorce.
In normal times, the pound tends to take its lead from changes in central bank monetary policy and economic indicators. But for several months now, “Brexit is definitively the biggest” trigger for sterling, Carlo Alberto De Casa, an analyst for ActivTrades, told AFP.
This in turn has made the currency a good indicator of investor opinion regarding Brexit.
Generally, Brexit uncertainty and fears of an even greater slowdown to the UK economy than at present have weighed on the pound – with current values lower than before the June 2016 referendum on leaving the EU.
The pound’s rollercoaster began late on Monday when British Prime Minister Theresa May announced securing “legally binding” guarantees from the EU designed to get the Brexit deal through the UK parliament and avert a chaotic withdrawal. Almost immediately, the pound shot up 1.0 percent against the dollar – a large movement for currency markets. Optimism continued into Tuesday morning, with analysts suggesting that May could yet win a parliamentary vote on her deal despite suffering a massive defeat first time around in January.
The “second… vote is no longer a certain defeat for the UK government”, wrote analysts at MUFG.
The pound has experienced a chaotic week in reaction to Brexit’s twists and turns, with large swings against rival currencies a daily occurrence. Over the week the pound has jumped 1.8 percent against the dollar and 1.0 percent versus the euro to trade at around $1.3250 and 1.1700 euros respectively Friday.
The rally illustrates markets’ surprising confidence of there being an eventual smooth EU exit for Britain despite political unrest over sealing the country’s divorce.
In normal times, the pound tends to take its lead from changes in central bank monetary policy and economic indicators. But for several months now, “Brexit is definitively the biggest” trigger for sterling, Carlo Alberto De Casa, an analyst for ActivTrades, told AFP.
This in turn has made the currency a good indicator of investor opinion regarding Brexit.
Generally, Brexit uncertainty and fears of an even greater slowdown to the UK economy than at present have weighed on the pound – with current values lower than before the June 2016 referendum on leaving the EU.
The pound’s rollercoaster began late on Monday when British Prime Minister Theresa May announced securing “legally binding” guarantees from the EU designed to get the Brexit deal through the UK parliament and avert a chaotic withdrawal. Almost immediately, the pound shot up 1.0 percent against the dollar – a large movement for currency markets. Optimism continued into Tuesday morning, with analysts suggesting that May could yet win a parliamentary vote on her deal despite suffering a massive defeat first time around in January.
The “second… vote is no longer a certain defeat for the UK government”, wrote analysts at MUFG.
