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Pound Rebounds as Johnson Assumes Office

Johnson assumed office as prime minister pledging to implement the result of the 2016 Brexit poll and take Britain out of the European Union on Oct. 31 with “no ifs or buts.”

That could pitch the country into a showdown with the EU and trigger a constitutional crisis at home, as many legislators have vowed to bring down any government that tries to push a no-deal Brexit.

UK financial information has further been sad in recent months, with a recession seen likely.

However, the pound rose as much as half a percent on Wednesday versus the greenback GBP=D3 and advanced to a three-week high against the euro EURGBP=D3 as traders reduce some extreme brief bets in opposition to the British currency.

Jordan Rochester, a strategist at Nomura, mentioned the pound’s move was a traditional “buy the hearsay and sell the fact” price action with traders cutting a few of their net brief positions in sterling anticipated to be nearly $6 billion.

Claire Dissaux, chief of global economics and strategy at Millennium Global Investments, stated Johnson would likely end up with a tough Brexit through a ‘Canada-plus’ type of trade settlement, which would be destructive for the economy and the pound.

Sterling stands lower than half a percent off the 27-month low it hit just lately against the greenback. It plunged 0.5% at $1.2495. In opposition to the euro, it further rose 0.5% as the single currency declined to a three-week low.

In the currency derivative markets, dryness measures remain high, with three- and six-month suggested buoyancy at the highest since April.

ING analysts stated Johnson faced a dispute with a split parliament over the no-deal situation.

Nina Sanders

By Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.

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