Home Forex Pound pushes higher in Europe on hopes brexit crisis may diffuse

Pound pushes higher in Europe on hopes brexit crisis may diffuse

by Jonathan Adams
British pound

The British pound is higher against the dollar and euro in Europe as the market hopes that Brexit will be softened

The British pound is higher against the dollar and euro in early trading in Europe on Wednesday, as the market leans on balance towards believing that Brexit will be softened, delayed or even cancelled.

The U.K. parliament rejected the government’s deal on leaving the European Union for a second time on Tuesday, effectively killing it as the EU has said it isn’t prepared to negotiate any more on the terms of leaving.

At 03:00 AM ET (0800 GMT), the pound was at $1.3142, up from around $1.3060 immediately after the vote, while EURGBP was lower at 0.8584.

The dollar index, which measures the value of the greenback against a basket of six major currencies, was at 96.94, practically unchanged.

The House of Commons is due to vote later Wednesday on whether to leave the EU without a deal on March 29, an option that has never commanded a majority and is highly unlikely to do so now.

In case the motion on leaving without a deal is also defeated, the House will vote Thursday on asking the EU for a delay to the March 29 deadline. However, that’s not something the EU wants to do unless it can see a clear reason for doing so. Till now, there isn’t any motion in parliament calling for either a general election or a second referendum that could overturn the result of the first one.

As such, the risk of an accidental “no-deal Brexit” is still alive, as EU negotiator Michel Barnier pointed out.

Barnier said that the EU has done everything it can to help get the Withdrawal Agreement over the line. The impasse can only be solved in the UK. The “no-deal” preparations are now more important than ever before.

Overnight, the dollar had wobbled after reports citing U.S. Trade Representative Robert Lighthizer as saying that raising tariffs on Chinese imports is still an option, given the lack of decisive progress in trade talks between the two countries. The remarks hit both the trade-sensitive Aussie and Kiwi, as did a weaker-than-expected Australian consumer confidence survey.

This article is for information purposes only.
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