Pound Falls as Brexit Concerns Outweigh BOE Hike ProspectsBy
EU said to prepare for a failure to advance to trade talks
Pound seeing ‘correction to yesterday’s surge’: Standard Bank
The pound fell on concerns over the Brexit process, as the European Union is said to be preparing for a failure to advance to trade talks in December.
Sterling dropped against most of its Group-of-10 peers amid negative headlines on Britain’s EU exit, trimming gains from Wednesday’s better-than-expected economic growth data. The EU is starting internal work on the possibility of failing to reach a breakthrough in talks, according to people familiar with the discussions, while Brexit Secretary David Davis backtracked on Parliament not getting a chance to vote on any deal and leader of the House of Commons Andrea Leadsom told lawmakers they would get the chance to debate Brexit law on Nov. 14 and 15.
“It’s probably a bit of a correction to yesterday’s surge,” said Standard Bank’s head of currency strategy Steven Barrow. “Brexit press has also been bad after the Davis gaffe yesterday.”
With the European Central Bank announcing it will cut its monthly asset purchases to 30 billion euros ($35 billion) for nine months beginning in January, market expectations of a BOE interest-rate hike next week remain high. Markets are currently pricing an 89 percent probability that the U.K. central bank will raise rates on Nov. 2.
The pound fell 0.5 percent to $1.3194 as of 1:31 p.m. London time, following gains of 1 percent on Wednesday. Sterling was little changed at 89.05 pence per euro. It reversed an earlier decline versus the common currency after the ECB decision to reduce stimulus, which was in line with market expectations.