British Prime Minister Theresa May suspended the process of discussing the draft agreement with the EU presented by her, causing massive sales of sterling.
May acknowledged that lawmakers are likely to refuse to accept the document. According to her, the government will start preparing the country to leave the union without a deal. After speaking, the pound collapsed to its lowest point since June 2017, then continued to decline to $ 1.25. On Tuesday, the pound is trying to show signs of life.
With the deterioration of the situation around the "divorce" of the UK and the EU, the pound may fall already below $ 1.25 this week, bank experts predict.
Until the uncertainty regarding the parliamentary assembly is resolved, it is best for traders to sell any rally. Such advice is given in Societe Generale.
The main negative for the pound is the political deadlock and the lack of specifics on Brexit and everything connected with it. At the moment, the prospects for the pound cannot be estimated, write banking analysts. Much will depend on the parliamentary vote or on the development of events in case there will be no voting.
Euro
Falling, the pound drew the regional currency. The political risks and the weakness of the eurozone economy do not give the "bulls" on the EURUSD pair a proper turn. According to researchers, trade wars, the budget crisis in Italy, the unrest in France and Brexit increase uncertainty. The end and edge of these problems are not visible yet.
As for the "American," because of Brexit, investors are trying to hide in dollar assets. However, in terms of monetary policy, nothing has changed. The dollar is on the verge of sales, and even its ardent defender Goldman Sachs is not so sure of tightening the policy in March and warns that the US currency may come under pressure after the deterioration of FOMC forecasts in December. However, the bank continues to believe that greenback will weather the storm and continue to strengthen.
