Daily Management Review

UK Minister for Brexit resigns, Pound Sterling falls


11/15/2018


The pound sterling fell by more than 1% after the British Minister for Brexit Dominic Raab announced his resignation, according to CNBC.



HowardLake
HowardLake
In a letter to British Prime Minister, Raab stated that he could not agree to the terms of the Brexit agreement she proposed.

This is expected to increase political pressure on May.

The pound sterling fell by 1% to $ 1.2856 after news of Raab’s resignation. The currency experienced volatility on the eve amid uncertainty surrounding the fate of the draft Brexit agreement in parliament.

Meanwhile, the yield of British bonds fell. Brexit news has increased the demand for defensive assets. The yield on 10-year German bonds fell by 3 basis points to 0.364%, reaching a minimum in more than two weeks, Reuters writes.

On Wednesday, Theresa May said that she received enough support from the cabinet to promote the draft Brexit agreement. However, observers note that there are doubts about whether the draft agreement will be approved by the British Parliament.

The 585-page draft Brexit agreement provides that the UK and the EU will agree on the terms of a trade deal by the end of 2020 during the 21-month transition period after Brexit. However, the transition period may be extended if the parties need more time.

“Raab’s resignation has just changed the situation. It’s difficult to be optimistic about the pound sterling in the short term. But at the same time, Theresa May experienced much worse. The question is whether we will see a wave of resignations,” wrote Nomura currency strategist Jordan Rochester in a note for customers on Thursday.

If the Brexit deal is approved by parliament, the currency could be in the region of $ 1.35-1.40, analysts told CNBC on Wednesday.

source: cnbc.com






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