After events at the weekend, both Boris Johnson and Leo Varadkar looked hopeful for a deal to be struck before the Brexit deadline. Changed levels of optimism meant that the pound fell early Monday morning.
In a busy day for British Politics, where the next years legislative plans are being announced, the pound saw a slump this morning.
After a tough week of up and downs for the British Pound, this morning saw a fall of 0.5% to below $1.26 (GBPUSD=X)
Talks are set to continue today, and whilst the Queen announces legislative plans for Brexit at the time of writing, the national currency continues to weaken.
Michael Hewson, chief market analyst at CMC Markets commented “Talks look set to continue today. However, it is hard to see any other outcome than a delay to the October deadline, with the government forced to apply for an extension by the end of the week. What that means for the government of Boris Johnson by the end of this week, is anyone’s guess, given his passionate refusal to countenance an extension.”
On Friday, the pound had regained some ground after progress was made between PM Johnson and Leo Varadkar rising by 2%.
Dean Turner, economist at UBS Bank said on Friday that there would still be some reluctance from market traders “The news will have cheered sterling investors, but we recommend they remain nimble with much still uncertain as the sand in the Brexit hourglass continues to run down”
After both leaders concluded that there was a possibility of a deal, Forex traders quickly pounced on opportunity allowing a recovery.
However this morning, optimism has faded. Following the weekends developments, traders have sold sterling slumping unit price.
As the pound lowers, it has still not reached the 45 year lows once met in August showing some positive sentiment.
Naeem Aslam, an analyst at Think Markets said “The view from the EU lawmakers has been pessimistic over the weekend and this has taken the wind out of sterling’s rally.Their tone has set alarms that a deal by the end of this week isn’t likely. If nothing materialises, the British prime minister will be forced to apply for an extension. Traders will continue to breathe and trade every headline.”
It is clear that traders are not confident either way, and risks on the British Pound are not being taken.
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