Sterling nears 10-day lows as Brexit impasse prevails

Investors wait as opposition leaders gathered to discuss tactics

Photograph: iStock

Photograph: iStock

 

Sterling fell on Thursday for a second straight day to near 10-day lows, as investors waited for parliament’s next step to break the Brexit impasse and opposition leaders gathered to discuss tactics.

The European Union’s Brexit negotiator, Michel Barnier, said Britain had yet to provide “legal and operational” proposals for an agreement on exiting the bloc at the October 31st deadline .

The UK Supreme Court dealt Prime Minister Boris Johnson a blow on Tuesday when it ruled he had unlawfully suspended parliament. The ruling reinforced belief that Britain was unlikely to leave the EU without a deal on October 31st, but parliament remains split, early elections look inevitable and Johnson remains adamant

Those fears eliminated all sterling’s gains since the Supreme Court ruling, for its biggest one-day fall against the dollar in two weeks. By 0815 GMT, it had slipped 0.14 per cent to $1.2332. It was down 0.1 per cent against the euro at 88.66 pence

“We don’t know where things will go with Brexit. That’s being manifested in sterling more than any other asset,” said Fahad Kamal, chief market strategist at Kleinwort Hambros.

“What we have done in the face of unknowable political outcomes and daily volatility is to make sure our portfolios can deal with any big moves, big rallies or big falls,” he added.

Implied volatility gauges in sterling/dollar – a measure of expected swings in a currency – rose. They had fallen after the court ruling

Chartists see the next big support level for sterling around $1.2280 – the 50-day moving average, a technical indicator that refers to the currency’s average closing price over the past 50 days.

British opposition Labour leader Jeremy Corbyn will meet other opposition leaders later in the day, as they discuss how to stop Johnson from quitting the EU on October 31st if he fails to secure a deal with Brussels by October 19th. – Reuters