Sterling slipped to its lowest since June 2017 following media reports on Brexit vote postponement. According to sources UK Prime Minister would delay a parliamentary vote on Britain’s Brexit deal. The pound slumped against the euro and the dollar on the news about the postponement on the eve of the vote.
The decision to halt the vote came just hours after an EU’s top court rule. The ruling upheld that Britain could unilaterally withdraw its decision to leave the bloc on March 29. This could be done without EU’S permission and without UK losing any special privileges.
The pound fell 0.5% against the dollar to $1.2622, its lowest in 18 month. It also dropped 0.7% against the euro to its lowest since Sept. 7.
Britain’s exporter-heavy FTSE index climbed as sterling fell, up 0.1% by 1150 GMT. The reports that May could delay the parliamentary vote triggered renewed uncertainty.
Perceived safe-haven British government bonds rallied on the news. The 30-year yields dropping as much as 7 basis points on the day to a 3-month low of 1.759 percent. The pound has fallen for four consecutive weeks.
Traders are trying to predict how the currency could react if May loses the vote on Tuesday and experts expect high volatility. A Reuters poll predicted a 2.75% fall in the currency should the vote fail to pass.
In case the vote outcome is against the deal there are several scenarios. A no-deal Brexit, a renegotiated deal and a second referendum are among the “options”.
START TRADINGForex – Commodities – Brexit Vote postponementreports: Sterling to 18months low
Dollar remained steady after biggest weekly loss in three months last week. Weak U.S. data undercut expectations of more interest rate increases in the world’s biggest economy.
Against a basket of six major traded rivals the dollar was flat after falling 0.8% last week.
The euro led gains, rising 0.34% at $1.1470 though market traders said currency markets will be in a wait-and-watch mode.
In commodities,oil fell on Monday, in line with further declines in global stock markets,erasing the gains made last week. Brent crude oil futures fell $1.02 on the day to $60.65 a barrel by 1045 GMT. Further, U.S.futures lost 98 cents to trade at $51.63 a barrel.
Prices rose 3% on Friday after the OPEC and some non-OPEC producers said they would cut oil supply.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.