Pound Sterling climbs as MPs vote to reject no-deal Brexit

(qlmbusinessnews.com via news.sky.com– Thur, 14th March 2019) London, Uk – –

Sterling climbed by as much as three cents to reach a nine-month high against the US dollar and added two cents against the euro.

The pound is clinging on to gains of the past 24-hours following a big leap as MPs voted to rule out a no-deal Brexit.

In volatile trading, Sterling climbed by as much as three cents against the US dollar to nearly $1.34, a nine-month high, and was two cents up versus the euro to as high as €1.18 – a new 22-month peak.

That was after an amendment rejecting a no-deal Brexit in all circumstances was narrowly backed by the Commons.

It had given up some of those gains by Thursday morning – trading at €1.17 and $1.32 – as investors mulled the political reality that the vote was non-binding.

But the pound moved higher again later after Goldman Sachs put the chances of a no-deal Brexit at 5% – a shift from Wednesday's position of 10%.

There was a broad welcome for the MPs' no-deal vote from business groups but it was combined with continued frustration about the lack of a clear way forward, with the Commons due to vote on Thursday night on delaying the Brexit process.

A survey for the CBI suggested nearly 9 in 10 firms would back a delay but only if the alternative is to leave the EU with no deal.

Commenting on the task ahead Edwin Morgan, interim director general of the Institute of Directors, said: “If they vote for an extension there will still be the considerable task of convincing the EU that there is an exit deal the House of Commons can get behind.”

Miles Celic, chief executive of TheCityUK, noted: “Unless the withdrawal agreement or some other realistic course of action is agreed very soon, the UK will still crash out, regardless of MPs' wishes.”

Business anxiety has mirrored days of high drama over Brexit in Westminster while currency markets have see-sawed sharply.

Sterling had hit a previous 22-month high against the euro earlier in the week when Theresa May secured a revised transition deal with the European Union before falling back again when it proved too little to win over parliamentary opposition.

Mrs May's crushing Commons defeat on Tuesday paved the way for the vote on Wednesday that saw MPs reject a “no deal” Brexit – seen as likely to create major economic uncertainty.

Investors see the further vote on delaying Brexit as positive for the pound as it could increase the Prime Minister's chance of securing a deal or even lead towards a second referendum.

David Cheetham, chief market analyst at xtb online trading, said: “It appears that hardline Tories are now starting to fear that the game is up and are looking to change tack and throw their weight behind the PM.

“There is significant scope for a sizeable relief rally in the pound, with the path of least resistance for sterling now appearing to be higher – albeit with several potential potholes still lining the way.”

By John-Paul Ford Rojas & James Sillars