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Sterling trims losses

The sterling recouped much of the night’s losses on Wednesday as optimism has grown that Britain may not leave the European Union without a deal in place although a broad selloff in global markets weighed on sentiment.

Prime Minister Theresa May’s government was found in contempt of parliament on Tuesday on the first day of the debate before the main vote on her proposed Brexit deal on Dec. 11. The British currency dropped sharply.

A group of her own Conservative Party lawmakers has also been challenged to give more power to the House of Commons if May’s deal is voted down.

This could reduce Britain’s likelihood of leaving the EU without any deal.

The formal advice from the European Court of Justice advocate general suggesting Britain may unilaterally withdraw its Brexit announcement helped ease some worries among investors that the UK breaks the bloc in March without a deal.

According to analysts at JP Morgan, the ECJ opinion raised the likelihood of the United Kingdom will remain in the European Union.

In early London trading, the pound was trading flat at $1.2740, recovering from an Asian session low of $1.2672. Against the euro, the pound advanced to 89.01 pence.

 

Source: Reuters