The big Brexit weekend is here! So, what can we expect?
When it comes to Brexit. Expect the unexpected. Anything is possible.
FX experts and strategists are certainly ruling nothing out ahead of tomorrow’s crucial parliamentary vote on Britain’s deal to withdraw from Europe.
GBP goes up. Then comes down. To say the task of forecasting for the currency is a challenge, would be an understatement.
According to strategists, the cable could soar to $1.35 or plummet to around $1.26 depending on the range of possible outcomes that could arise from Brexit’s climactic moment.
It’s the moment we’ve all been waiting for, ever since news broke during the 2016 referendum. Could Brexit and GBP finally be reaching the end of the tightrope?
Just this month, the pound has jumped 5% to approximately $1.29.
It’s a tense time as traders await the news to see whether PM Boris Johnson has managed to secure the divorce deal that was sealed this week.
The question is, can he convince all of the sceptical voices in the House of Commons?
If it goes the other way and the deal is rejected, we can expect anything from an election to a second referendum, or possibly worse, leaving the EU with no deal in place.
According to TD strategists, if the deal is passed, the pound could compete with its May highs of $1.3185.
Chief Investment Officer at UBS Global Wealth Management, Mark Haefele, said that a “convincing deal” could send the pound to $1.35.
For a deal to be passed through parliament, Johnson needs 61 of 85 possible votes, however as explained in yesterday’s news, Northern Ireland’s Democratic Unionist Party are firmly against the deal.
Strategists have predicted that the value of GBP would be tested should the deal be rejected, opening the doors for a general election, followed closely by additional blows to the pound accumulated from the request for a Brexit extension.
Plus additional scenarios could surface as a result of a rejected deal.
Risk gauges on GBP continue to swing back and forth, with volatility remaining high. We can expect chaos during early morning trading in the aftermath of this weekend’s drama when liquidity can be limited and exacerbate price swings.
Look out for UK construction PMI data which are due today and may help the sterling to continue its pursuit of the 1.16 threshold.
Elsewhere, European PMI figures gave the Euro a slow start, down 0.2% against USD & 0.15% against GBP.