The original Brexit day which was supposed to be today has been postponed – to exactly when remains unknown. The British pound is on track for its worst month in five months.
UK MPs have rejected Theresa May’s EU withdrawal agreement, further frustrated UK’s Brexit. Brexit supporters planned protests outside Parliament today, while lawmakers inside will vote again on a version of PM May’s withdrawal agreement. Thousands of people opposed to Britain delaying its departure from the EU marched through central London on Friday as the government scrambled to salvage its Brexit plan.
Britain was supposed to have left the EU on Friday, but Brussels let London delay its departure. In the meantime, Theresa May struggles to try to secure a consensus on how and when to leave the bloc.
The rising uncertainty has battered sentiment towards the pound this month after some optimism that the United Kingdom would successfully avoid crashing out of the EU without a deal bolstered the British currency. Traders say investors and particularly hedge funds have scaled back their trading of the pound. It has become so difficult to predict amid the constant and sometimes arcane political developments.
The currency rallied as much as 0.7% before trimming some gains as hopes May would pass her deal fell back, to stand 0.3% up on the day at $1.3074. It was up 0.1% against the euro at 85.97 pence.
START TRADINGForex – Brexit Day not today – Worst month in 5 for sterling
The lack of trading activity has reduced liquidity in the market, exacerbating swings in the currency.
The dollar index on Friday morning was lower as increased investor appetite for risk hurt safe-haven currencies. U.S. inflation data came in weaker than expected, adding to the conviction that the country’s economy is losing momentum. With many currencies on the defensive, the dollar had this week weathered a decline in benchmark Treasury yields to a 15-month low.
In spite of the soft data, investors on Friday morning favoured riskier assets such as stocks, over safe-haven currencies like the dollar, the Japanese yen and the Swiss franc.
The euro was headed for its worst month since October, weighed down by fears about economic growth and cautious signals from the ECB. Policymakers cut growth forecasts for the euro zone economy earlier this month and launched a new round of cheap loans to its banks. The euro was a tad higher at $1.123 but remained down about 1.2% for the month.
Sources: Reuters, Investing, CNN money
PLEASE NOTE The information above is not investment advice.