Pound falls as May’s revised Brexit deal deemed dead on arrival
Sterling tumbled on Tuesday as investors initial optimism over Theresa May’s new Brexit deal slipped away as legal risks over Irish backstop persist.
The pound lost ground against the dollar on Tuesday after investors optimism over the prospect of Theresa May’s new Brexit deal being passed in parliament were squashed by the UK Attorney General Geoffrey Cox.
Sterling slid as much as 1% against the dollar after Cox announced that legal risks persist over the controversial Irish backstop, dashing any hopes that the UK Prime Minister had at garnering sufficient support in parliament to get her new Brexit deal passed in a vote on Tuesday evening.
'Given the euphoria overnight, it’s a disappointment for sterling,' Neil Jones, head of currency sales for financial institutions at Mizuho Bank said.
'The market was looking for legal support in order to shift the vote tonight and push the deal through. Cox’s legal opinion on the matter will shift the market away from deal success expectations.'
Theresa May’s revised Brexit deal sends pound lower
By midday in London, the pound had fallen $1.13052, representing a 0.8% decline in the currency, with investors propping up sterling after it hit a low of $1.3005 earlier in the session. The pound faired even worse against the euro, with it tumbling 0.9% on Tuesday.
“Sterling has been knocked back on the news that Cox is not throwing all of his weight behind last night’s amendment to the Withdrawal Plan,” Rabobank International currency strategist Jane Foley said.
‘Sterling is the best-performing currency in the year to date implying that there is plenty of good news priced in. I think it could be on the back foot today unless May’s deal is passed.’
DUP deals major blow to sterling
In what has been a tough day for the pound, the Democratic Unionist Party (DUP) was on hand to ensure the currency suffered significant losses at the hands of investors after reports began to circulate that Arlene Foster’s party would vote against May’s revised Brexit deal.
The DUP’s decision to not support May’s new deal means that the prime minister will almost certainly be defeated in the House of Commons later tonight and will likely lead to Article 50 being extended.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
See your opportunity?
Seize it now. Trade over 17,000+ markets on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
