Pound Sterling Slump Shadows Boris Johnson 's Latest Brexit Setback

UK News

Pound Sterling shrugs off Boris Johnson 's latest Brexit setback with a slight fall on October 21. British lawmakers called for a Brexit delay on Saturday.

Written By Tanima Ray | Mumbai | Updated On:
Pound

Following UK PM Boris Johnson's failure to break the Brexit deadlock, the British Pound Sterling fell slightly on the morning of October 21. The British Pound Sterling reportedly fell by 0.55% to US$1.2913 at around 0000GMT, which is relatively steady as compared to the ups and downs seen last month. Anticipations around the value of Pound had surged after the House of Commons sat on Saturday, October 19 to consider Johnson's EU divorce deal.

Stephen Innes, Asia Pacific market strategist at AxiTrader, in a commentary wrote: "The fact Sterling has proven surprisingly resilient... buttresses well for risk sentiment".

Read: Brexit: Protestors Fill London Streets Demanding A 2nd Referendum

Effect of Brexit on Pound Sterling

Saturday's vote was seen as a potential turning point in the long-running Brexit saga. Instead of coming to a conclusion, lawmakers instead voted for another Brexit delay in order to save Britain crashing out of the bloc on October 31 with no agreement in place. Though the British PM agreed to the delay after much ado, the conservative government is still expected to exit the deal by the end of this month. The EU is yet to respond to the delay request. Shinichiro Kadota, an exchange strategist at Barclays Securities in Japan told the media that the market was observing Saturday's parliamentary session instead of focussing on the decision.

"There had been hopes late last week that this issue would finally see a settlement. But now it's been shelved. The pound rallied to close to $1.30 from $1.22... We can say it is holding firm, which shows hopes (for avoiding no-deal Brexit) have not been dashed," Shinichiro said.

Read: Brexit: PM Boris Johnson Forced To Ask EU To Delay Exit Date Again

Sterling's fate as predicted by Forex experts

Speaking for the forex, a senior forex strategist at National Australia Bank, Rodrigo Catril said, "the market was not in wait-and-see mode. We saw the pound lose a little bit of ground, but from the perspective of what it's gained over the past week, that's really minimal".

Read: Boris Johnson's Brexit Plans Delayed As Parliament Postpones Decision

Elaborating his observations, Catril said that it seemed Britain would come to a deal before October 31 yet a great deal of uncertainty still remains. There is the possibility of a confirmatory vote for Britain's exit, or there might be a second Brexit referendum, he added. The forex strategist thought that Saturday's commentary seemed like a fair bit of support rising for Boris Johnson to get the deal done, but details are what matter. Foreign Secretary Dominic Raab's claimed that the UK government had the numbers to push through Johnson's deal proved correct in order to make the Sterling rise, he said.

"But we're not yet certain that the government has got the vote, so that points to a little bit of cautiousness in terms of the pound facing a little bit of uncertainty in the coming days," the forex strategist said.

(With inputs from PTI)

Read: Cheers Erupt Outside Parliament As Brexit Delayed Again

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