Sterling steadied this morning however it was on track for a third consecutive week of losses as investors keep clear before the British parliament’s vote on Brexit next month.
Prime Minister Theresa May said yesterday she was focused on persuading lawmakers to back her divorce deal with the European Union in a Dec. 11 vote, rather than preparing a plan B.
May secured an agreement with EU leaders on Sunday that will see Britain leave the bloc in March next year with continued close trade ties, but the odds look stacked against her getting it through a deeply divided British parliament.
We expect the deal to be rejected by parliament although we give the highest probability by far to the UK ending up with some form of the May deal.
Those concerns were reflected in the currency markets, with the British currency down nearly 3 percent in the last three weeks and derivative markets indicating more hedging activity before the vote.
We are hearing so far at least 100 of her party will reject her Brexit deal.