Sterling’s value rose in the later part of last week after Prime Minister Theresa May came back from negotiations with the EU in Brussels. The talks last week ended in hope that both sides were willing to work together to secure a deal.
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At present, sterling is benefiting from such speculation as parliament seems to be working with Theresa May at present. A crunch vote, in which Theresa May would be forced to show her hand to parliament was scheduled for Thursday this week but has been delayed until the end of the month or possibly later to allow Prime Minster Theresa May more time for cross party talks and to renegotiate with Brussels. Theresa May travelled to Ireland to hold talks with Irish Prime Minister Leo Varadkar on Friday in an attempt to leverage her position on the Irish border.
For now, I would expect sterling to remain buoyed, with analysts expecting sterling to gain somewhere between 5-10% if an 11th hour deal is secured, however could be catastrophic for sterling’s value and the U.K. economy if a deal isn’t reached, with some analysts predicting
Brexit has and will continue to dominate sterling’s value this week, with GBP/EUR sitting above 1.14 and GBP/USD nearly at the psychological 1.30 barrier. Donald Tusk last week said that Jeremy Corbyn’s Brexit plan was the key to negotiations moving forward. Late last night, Theresa May responded to Jeremy Corbyn’s letter outlining his support for Theresa May if she would make 5 commitments, one of which is joining the customs union. No commitments have been commented on specifically at this stage, with the Prime Minister initially just responding from the letter last week.
Brexit headlines are likely to remain the driver behind Sterling’s value this week. MPs were likely to have a vote on whether Theresa May should show her hand with regards to Brexit, however this is expected to be delayed in order to give the PM more time to negotiate with Brussels and Labour the tricky Irish border issue.
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