Sterling strengthens as markets rule out no-deal Brexit scenario

Sterling put in another very impressive performance last week, rallying by over two percent on growing optimism that a ‘no deal’ Brexit will be avoided.

Support among MPs for Yvette Cooper’s amendment that would delay Article 50 sent the Pound sharply higher, as did reports that the DUP could be ready to back May’s deal, provided a time limit to the NI ‘backstop’ is included.

This week will again be dominated by Brexit, namely Tuesday’s parliamentary vote. The vote will not be on May’s deal itself but on the proposed amendments to her withdrawal bill. We think that strong support among MPs for either a delayed Brexit, second referendum or ruling out of a ‘no deal’ would see a sharp rally in Sterling.

GBP/PLN (18/01/19 - 28/01/19)

Source: Thomson Reuters Datastream Date: 28/01/19

Author: Enrique Diaz-Alvarez, Chief Risk Officer at Ebury

Keywords Ebury