‘No Deal’ Brexit Unlikely
- Posted by currencies in Bank of England, Bremain, Brexit, Currency, Dollar, Economy, EUR, GBP, Prime Minister, Referendum, Sterling, UK, Uncategorised
- January 18, 2019
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The British pound rose to a two-month high against the euro, extending recent gains on growing expectations Britain can avoid a no-deal withdrawal from the European Union. Talk of a second referendum vote in the UK sparked a rally in afternoon trade which further lifted the currency.
Prime Minister Theresa May has been meeting lawmakers from all parties in an attempt to find a way out of an impasse over how Britain should leave the EU, after May’s own plan was resoundingly rejected by parliament on Tuesday.
While she has repeatedly rejected a second referendum, a vocal campaign in favour of holding a new vote has the support of some lawmakers.
The pound managed to hold on to most of its overnight gains against the euro as traders wagered on a second referendum vote on Britain’s EU membership.
The dollar steadied this morning but was set for its first weekly rise in five weeks as doubts grew on the ability of other major global central banks such as the European Central Bank to start raising interest rates this year.
While the prospect of another Fed rate hike has been virtually ruled out of money markets this year, markets have also whittled down the odds of the ECB raising interest rates on the back of weak economic data, weighing on the single currency.
Money markets are assigning less than a 50 percent probability of an ECB rate hike this year and 80 percent likelihood of a rate hike from the Bank of England.
The U.S. dollar was left flat yesterday afternoon after first rising on a report that U.S. Treasury Secretary Steven Mnuchin had considered easing tariffs imposed on Chinese imports, then retracing those gains after his office denied the claim.
Mnuchin discussed lifting some or all tariffs on Chinese goods and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30.
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