The pound climbs 1.7% this week as no-deal Brexit voted down
This week the pound had its best week since January following two major Brexit votes in the House of Commons.
Sterling has remained flat on Friday following the currency’s best week of trading since January, with the pound finding support following two major Brexit votes in the House of Commons.
The supporting sentiment heled sterling to rally more than 1.7% against the dollar this week, after British MPs voted to rule out leaving the EU without a deal in place in a non-binding vote and backed a delay to Article 50 beyond the March 29 deadline.
On Friday, the pound is trading at $1.3240 levels, with the currency trading between a range of $1.2945 and $1.3380 this week.
Theresa May’s Brexit deal faces third vote in Parliament
FX investors are awaiting another key Brexit vote next week that will see UK Prime Minister Theresa May have her deal voted on for the third time.
Despite the ongoing uncertainty surrounding Brexit which has served to weaken the pound, MPs decision to take a no-deal Brexit off the table this week and avert severely damaging the UK economy gave investors a reason to send sterling higher.
Next week, May will be hoping that the threat of a longer delay to Brexit will convince Conservative rebels to finally back her revised withdrawal agreement.
No-deal Brexit priced out, says BNP Paribas
Analysts at the BNP Paribas released a report that shows short sterling positioning has been relaxed to +10 from -33 at the start of 2019. To put those numbers into context -50 is the largest short position possible, with +50 being the greatest long position available.
The bank’s analysts also said that probability of the Bank of England raising rates had risen to a 50% from 24% in February.
‘The market has already shifted significantly to price out a no-deal Brexit,’ BNP analysts said. ‘As this suggests, markets may be vulnerable to any downside surprises, we do not yet see attractive risk/reward to enter structural long GBP or bearish UK rates outright positions.’
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