Pound recovers some of its losses

Dhaka,  Thu,  08 December 2016
Published : 12 Oct 2016, 20:04:42

Pound recovers some of its losses

Pound recovers some of its losses
The pound has recovered some of its losses with analysts attributing the gains to the promise of a Commons debate on the Brexit process.

The pound is currently trading 1% higher against the dollar at $1.22.

Sterling has been sliding since Mrs May announced on October 2 that the formal Brexit negotiation process would start by the end of March 2017.

Traders sold the pound, fearing the effects of a UK exit from the single market.

However, MPs have been demanding to scrutinise the plan to leave the European Union before that date, and on Wednesday the government agreed there should be a "full and transparent debate".

But it added that the process should not "undermine" the government's negotiating position.

"After weeks of tough rhetoric pushing sterling into a trading environment closer to an emerging market currency, the government may aim to stabilise markets, with its rhetoric and suggestions now possibly shifting in tone," said Morgan Stanley's head of currency strategy, Hans Redeker.

"However, there is a fine line to walk as May's Conservative Party wants a clean split from Europe. In addition, giving in too much, even before Article 50 negotiations have started, shifts the negotiation advantage towards the EU. Hence, the pound's rebound should be limited and followed by a decline," he added. -BBC
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