The dynamics of the British currency amid heated debate around the least traumatic option for Britain to exit the EU left much to be desired. The pound experienced the strongest price fluctuations and hardly held the gained positions. He has a little respite now, but for how long?
A short pause in the dynamics of the pound is caused by a three-month delay by Brexit, to which European leaders agreed. Earlier it was reported that the European Union has ratified the flexible terms of the delay in relation to the British exit from the eurobloc. Recall that the country was supposed to leave the EU this Thursday, October 31, but now the deadline has been moved. It was announced that 27 participating countries agreed on a deferral of Brexit. The date of exit from the EU is now postponed to January 31, 2020. If the British Parliament ratifies the withdrawal agreement in November, the country will leave the bloc on December 1, 2019, and if it ratifies in December, the "divorce" will take place on January 1, 2020. Brussels is currently awaiting formal agreement from London regarding the postponement granted until the end of January.
According to experts, such conditions are favorable for the UK, since early parliamentary elections can be held in the country on December 12, 2019. In this case, British Prime Minister Boris Johnson can accelerate the ratification of the agreement with the European Union. According to the law, signed by the British Parliament, Johnson is obliged to accept the offer of deferment at the time of its receipt. Earlier, the prime minister said that the country will leave the eurobloc on October 31 in any case, with or without a deal. However, the politician had to reconsider his plans. He submitted to Parliament, counting on the approval of the new elections scheduled for December 12, in exchange for his postponement. According to Johnson, a new election is an urgent need and the best way to break the current impasse.
Monday's political debate around Brexit did not affect the pound too much. It stabilized within 1.2859–1.2861, pausing to vote on the issue of holding general elections.
The political clouds hanging over Britain for a long time have been a bit dispelled. This positively affected the dynamics of the pound, which gradually began to grow. On Tuesday, October 29, the GBP/USD pair rose to 1.2870. Subsequently, the pair traded in the range of 1.2855–1.2856, showing a downward trend.
According to analysts, the pound will be able to return to the 1.2950 area if the ratification processes in the House of Commons go more intensively. The GBP/USD pair is testing the 1.2841–1.2842 marks at the moment.
According to currency strategists at Bank of America Merrill Lynch, relatively quiet times are coming for sterling. The risk of an uncontrolled exit from the EU, that is, the "hard" Brexit, tends to zero, and this is a very positive factor for the British currency. If Parliament approves the Brexit deal, the pound may rise above 1.3000, the bank believes. Experts are certain that the pound will test the level of 1.3500 in the near future, which is 5% higher than the current figures.
In general, experts assess the condition of the British currency as not very stable. This is not surprising: the pound, along with the European currency, was experiencing severe congestion due to difficulties with Britain's exit from the European Union. The long search for a compromise between London and Brussels negatively affected the currency of Great Britain. The pound involuntarily became a bargaining chip in a political game called Brexit, a pawn in the hands of financiers, and this does not suit anyone. Analysts are confident that, having received a respite, the pound will gather strength and again rush into the battle, which will be able to win.
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