Swissquote Bank Research Team
Swissquote Bank Ltd
After facing a tough defeat in front of the UK parliament and surviving a vote of no confidence, PM May continues struggling to make her points among the assembly. The recent statement made by Labour party leader Jeremy Corbyn that a second Brexit referendum would be a good resolution confirms that PM May continues to face disagreements.
Indeed, the position maintained by PM May, which favors the maintenance of current 29. March 2019 deadline while not considering the idea of a second referendum and of a comeback into closer association with the EU, is pausing problems for investors, as the future direction of the divorce and the British pound remains largely unknown. For now, it seems that investors are supporting a bullish bias over the pound, which clearly made decent gains against major currencies (Week-to-date EUR/GBP: -1.36% and GBP/USD: +0.70%). However, under current circumstances, and considering the short amount of time given to PM Theresa May to provide the House of Commons with a decent plan B (deadline on Monday), it appears that the postponement of current Brexit due date through the extension of Article 50 remains the single, realistic solution for now to dismiss the risk of a hard Brexit. Would it be a GBP positive? Difficult to say. But to be brief, it seems that current GBP move remains highly risky, since the future European Parliament elections from May 2019 could play a key role in current situation.
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GBP/USD is currently valued at 1.2944, approaching 1.2850 short-term.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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