Infotech

Brexit: fear of a “no deal” causes the pound to fall


Posted on Dec 11, 2019 2020 at 16:48

As the hope of a trade deal before December 31 fades, the fall of the pound sterling is confirmed. After falling throughout Thursday’s session, the British currency continued to fall on Friday. At 2 p.m. GMT (3 p.m. French time), the pound sterling thus lost 0.86% against the single currency, and 0.96% against the dollar.

Earlier today, it traded at 91.93 pence to the euro, the lowest price since September 23. The day before, the pound sterling had already plunged against the euro to the lowest level recorded since the end of October.

For several days, the British currency has been subject to very significant volatility according to the statements of stakeholders in the negotiation on the terms of the divorce between the United Kingdom and the EU. And they are particularly pessimistic this Friday. Boris Johnson considers “very very likely” the failure of talks with the European Union. For her part, the President of the European Commission Ursula von der Leyen said that hopes for an agreement with London on the future trade relationship were “weak”, while the two parties gave themselves until Sunday to decide on the terms of their divorce.

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A situation that Ricardo Evangelista, from Activtrades, compares to a “roller coaster”. “Every day that passes without positive development increases the level of risk for sterling holders” in the market, he adds.

While uncertainty weighs heavily on the currency’s price, Han Tan of FXTM, however, believes that “the pound has not yet surrendered” and that there is still “enough hope for a deal. commercial is concluded before the deadline of December 31 ”. On Wednesday, after a complicated day and shortly before a last-ditch dinner between Boris Johnson and Ursula von der Leyen, the pound finally ended up 0.31% against the dollar, and 0.52% against the dollar. to the euro.

On the stock market, British equities suffer from the same suspense. At the opening of the London Stock Exchange on Friday, the FTSE-100 index of major stocks lost 0.91%. “Prepare for big moves in sterling and UK stocks as the prospect of a no-deal Brexit draws closer,” commented Susannah Streeter, analyst at Hargreaves Lansdown.

AFP source

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