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Sterling Bounces Back

Sterling tumbled to its weakest since April 2017 yesterday after Prime Minister Theresa May pulled a parliamentary vote on her Brexit deal with the European Union, panicking investors about deepening political uncertainty in Britain.

May said on Monday she was delaying the planned vote as her deal would likely be rejected “by a significant margin”. Colleagues had told May that she faced a rout in the vote, that was set for later today.

May said she would do all she could to secure further assurances from the EU on the so-called backstop arrangement, a crucial part of the deal bitterly opposed by many of her fellow conservatives and opposition parties.

The pound has fallen for four consecutive weeks, with traders struggling to comprehend the vote options and consequences of more political instability.

This morning Sterling has bounced back from the lows we saw yesterday.

The European Union is willing to give Britain further clarifications on its Brexit deal but will not renegotiate.

Addressing the European Parliament in Strasbourg, the European Commission president said he was “astonished” at Prime Minister Theresa May’s inability to get the package agreed with the EU last month through the British parliament.

Noting that he would meet May in Brussels on Tuesday evening ahead of an EU summit on Thursday and Friday, Juncker said: “The deal we achieved is the best possible. It’s the only deal possible. There is no room whatsoever for renegotiation.”

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