Potential Chaotic Brexit causes concerns among traders. Investors’ confidence remained fragile after deepening political uncertainty in Britain.
Britain’s prime minister postponed a Brexit vote, sending the pound to near 20-month lows of $1.2507. Sterling slumped below important chart support around $1.26. Sterling was up 0.4% at $1.2615, recovering after falling 1.6% against the dollar on Monday.
Theresa May will meet with European Union leaders today hoping to find a way to renegotiate her Brexit deal. There was supposed to have been a vote on the deal today in Parliament. However, May decided to call it off after it became evident it would fail. It is not clear her attempts at reworking it will work either.
Some EU leaders stated that this deal is the best one UK will get and they don’t wish to renegotiate. There are talks among British lawmakers of holding a second Brexit referendum. The fear that the UK could exit the EU in March without a deal is now real.
Britain’s parliament will vote on whether to approve Theresa May’s Brexit deal before Jan. 21, her spokesman said on Tuesday.
In case the vote outcome was against the deal there were several options. A disorderly no-deal Brexit, a renegotiated deal and another referendum are among such “options”.
Investors are most worried about a scenario where Britain crashes out of the European Union without a deal. Accordingly, that would tangle supply chains and push the UK economy into recession.
START TRADINGForex – Commodities – Potential Chaotic Brexit causes concerns among investors
The pound’s slide has helped the dollar, which recovered from a 2 1/2-week low against a basket of currencies. The dollar index was down 0.3% at 96.952 after rallying 0.75% on Monday.
Further, weakness in sterling helped nudge the euro up 0.3% to $1.1387. However, concerns over protests in France have limited the euro’s gains recently. Investors in the euro are also focused on the European Central Bank’s economic assessment of the euro zone, due on Thursday.
In commodities, Oil prices rebounded strongly from earlier hefty losses, having sunk on Monday. U.S. crude futures rose 56 cents to $51.56. Brent futures rose 45 cents to $60.42. A strength in global stocks, a bit weaker dollar and an unplanned supply outage in OPEC member Libya lent support.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.