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Pound Receives Some Support but Brexit Worries Keep It Close to Lows

The British pound increased barely on Tuesday to hold above new lows although it remained weak as investors still fear that Britain is headed for a no-deal Brexit.

Sterling hit a brand new 23-month low against the euro in a single day, with the losses down to strength in the single currency instead of more Brexit-linked fears.

A newspaper reported late on Monday that Brussels diplomats briefed after a meeting with British PM Boris Johnson’s chief European diplomat said it was clear Johnson had no purpose of renegotiating the departure settlement.

Johnson has mentioned Britain will leave the European Union on Oct. 31 with or with no deal.

The voltality of a no-deal Brexit in October has risen in recent weeks under Johnson’s regime, beating the pound to its lowest in more than two years.

On Tuesday, sterling climbed 0.3% versus the greenback to $1.2173, away from the 31-month low of $1.2080 hit last week.

Against the euro, the pound gained from a nearly 2-year low of 92.49 pence to touch 92.06 pence, up 0.2% on the day.

“In the run-up to the Brexit deadline at end-October, we count on EUR or GBP to remain volatile and maybe more than we previously expected. Financial markets are taking Boris Johnson’s direct approach literally and, in the run-up to October, this might mean EUR or GBP will float higher,” Danske Bank analysts stated, foretelling sterling could go to 97 pence.

“Our base case proceeds to be a much less dramatic consequence at the end of October. We wish EUR or GBP to settle at 0.89-0.91 (89 to 91 pence per euro) on the back of addition or snap election,” they added.

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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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