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Sterling on above 1-1/2 year low

Sterling held over a 1-1 / 2-year low on Thursday, as worries on how a British Parliament voted on Prime Minister Theresa May’s Brexit deal next week, will unfold prompting investors to stay away.

May struggles to conclude the Brexit deal, which was negotiated with the European Union through parliament, during a vote scheduled for Tuesday, with a treaty that faces a heavy opposition from members of Parliament both for and against Britain leaving the bloc.

“It looks very difficult from where we are trading now as there are multiple scenarios ahead if she fails to win the vote,” said Fritz Louw, a currency strategist at MUFG in London.

Sterling was flat at $1.2732 and just shy of a June 2017 low of $1.2659 reached earlier this week. Against the euro and the yen, the pound was flat at 88.98 pence and 143.72 yen respectively.

The proportion of investors looking to raise their holdings of the UK dropped to 15% from 21% in the third quarter, according to a State Street Survey, which shows investors are becoming more cautious as Brexit talks approach a critical point.

The pound and the British stock market top the list of bearish bets among global investors, due to Brexit worries, although this may lead to a big snap back if an orderly Brexit or no-Brexit are the outcome.

Currency derivative markets painted a picture of relative calm on Thursday as investors remained cautious.

 

Source: Reuters