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Second Referendum?

The pound hovered near 18 month lows this morning, with reports that more politicians are calling for a second Brexit referendum.

With British Prime Minister Theresa May facing deadlock in parliament over her deal to leave the European Union and the bloc offering little so far, calls for a second referendum are growing louder.

It is not clear what impact, if any, a second vote would have on Sterling. Some analysts suggest the currency could jump because it could reduce the risk of a no-deal Brexit, but others say it would only deepen the economic and political uncertainty.

Traders appear to be shying away from taking big bets on the British currency with so much doubt about the chances of securing a deal with the EU less than four months before Britain is due to leave the bloc, on March 29.

Sterling has fallen for five consecutive weeks against the dollar.

Traders say the 20-month low of below $1.25 hit on Wednesday last week would act as a temporary support for the battered currency unless there were further clarity on the outcome.

Despite the tough task that May faces in winning concessions from the EU over the Brexit deal agreed on Nov. 25, most investors think the British parliament will eventually back a “softer Brexit” rather than a complete separation from the EU.

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