Pound soars ahead of no-confidence vote in May triggered by lawmakers in her Conservative party. In turn, the UK Prime Minister warned them that they jeopardize Brexit.
Britain’s prime minister postponed a Brexit vote on Tuesday, sending the pound to near 20-month lows of $1.2507. Sterling slumped below important chart support around $1.26.
The Sterling stabilized in European trading as some investors bet that May would win Wednesday’s vote.
The pound rose as much as 0.7% to $1.2585 from below $1.25 earlier in the session. Against the euro, sterling rose half a percent to a session high of 90.07 pence. However, it was still near its weakest in 3-1/2 months.
With less than 4 months until Britain is due to exit the EU on March 29, May warned eurosceptic hardliners that if they toppled her, the departure from the EU would have to be delayed and perhaps even imperiled.
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. That would tangle supply chains and push the UK economy into recession.
Forex – Commodities – Pound soars ahead of no-confidence vote in May
The dollar edged higher for a third day before a widely expected U.S. interest rate hike next week. However, its gains were limited by growing expectations that FED may express a more cautious view on future rate rises.
The dollar has gained nearly 6% against a basket of currencies this year on the back of Fed rate increases.
On Wednesday, the dollar was a touch higher at 97.40 but moves were tiny in range bound markets. The euro rose 0.1% to $1.1334.
The euro/Swiss franc remained unchanged.
The Australian dollar, a gauge of broader risk sentiment, was up 0.2% at $0.7217.
In commodities, Oil rose to about $61 a barrel on Wednesday. A report showing U.S. crude inventories drop, a Libyan exports cut and an OPEC-led deal to trim output supported the prices.
Brent crude LCOc1, the global benchmark, rose $1.07 to $61.27 by 0947 GMT. It has still fallen by almost a third since early October. U.S. crude CLc1 gained 99 cents to $52.64.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.