The pound has left a seven-week high and apparently, it will continue to decline. Investors are preparing for the next round of voting on Brexit, where the plan proposed by Prime Minister Theresa May will be discussed. It is expected that it will not be adopted.
Sterling will be under attack in the short term until the parties determine the conditions for Britain's exit from the European Union. Possible options include a deal in the last minutes, an exit without any arrangement and a new referendum or a further stay in the block to name a few. Each of these can have radically different implications for the currency.
Lately, the pound has grown amid expectations that the UK will seek to postpone the withdrawal from the European Union. The key question for sterling is whether this vote on the May deal signifies that Britain will not leave the EU on March 29. We expect that after the failure of the vote, May will return with an expanded version of the Brexit agreement to attempt in getting more guarantees from the EU.
At the same time, despite the uncertainty, the risk that the pound will fall against the dollar is the lowest in the last four months, according to indicators of changes in risk. Expectations of fluctuations in the value of the sterling pound also decreased in the last few sessions. Not all analysts agree that a Brexit delay will benefit the UK. An additional negative factor is the reduction of consumer and business confidence, which means that extra time in a state of uncertainty is very expensive.
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