Pound wins holiday from sell-off

19 August, 2019 12:00 AM printer

London: For Brits looking to escape the UK in an increasingly wet August, the pound might offer some relief with a recovery against the euro.

Sterling ended a record run of losses against the common currency this week and analysts are cautiously optimistic on its near-term prospects, report agencies.

Growing resistance among opposition lawmakers to a no-deal Brexit has led traders to cut the probability of the UK leaving the European Union on Oct. 31, while a lot of pessimism is already baked into the market by fund managers.

Sterling has had a tumultuous few weeks since Boris Johnson succeeded Theresa May as UK Prime Minister, with a promise to deliver Brexit on Oct. 31 “do or die”.

That saw the pound extend its slide against the euro to 14 straight weeks and had fund managers and strategists considering the risk of a plunge to parity against the dollar.

With the pound recovering 2 per cent in the past five days to 91 pence per euro and bouncing above $1.21 after Labour leader Jeremy Corbyn sought rival parties’ support, the market’s bearish view might be coming under pressure, according to Jordan Rochester, a currency analyst at Nomura International Plc.

He sees the odds of Brexit by October at 41 per cent now, from over 50 per cent earlier this month.

“The market is clearly witnessing a further position reduction on the Remainer news flows” and this is supporting sterling, Rochester said.