Sterling dips as Trump and Fallon launch attacks on Theresa May’s Brexit deal
Sterling suffered another fall today amid increased doubt over whether the Prime Minister’s Brexit bill will pass through parliament.
Theresa May announced yesterday that the Commons vote on her deal will take place on Tuesday 11 December. But division among MPs has taken its toll on the markets, which remain wary of a no-deal Brexit.
In the latest sign the Prime Minister will struggle to steer her deal through parliament, former defence secretary Sir Michael Fallon today told the BBC that the draft withdrawal agreement deal is “doomed”.
President Trump has also weighed in on the issue, describing the proposed agreement as “a great deal for the EU” that would hamper the UK’s trade with the US.
Sterling fell to a low of 1.274 against the dollar, before climbing back up marginally to 1.276. However, it remains well below its opening 1.286.
David Cheetham, chief market analyst at XTB, said: “Comments from US President Trump last night that downplayed the chances of a US-UK trade deal after Brexit have no doubt not helped the pound’s plight.
“But the drop is more likely due to remarks from former May loyalist Sir Michael Fallon, which raise further concerns about her ability to get it through parliament.”
May’s office today issued a rebuttal to Trump’s comments, saying the UK has been laying the groundwork for an “ambitious agreement” with the US.
Marios Hadjikyriacos, investment analyst at XM, said: “Sterling could remain under pressure ahead of the vote as uncertainty grows, with any rebounds likely to remain short-lived.
“That said, with investors increasingly pricing in a rejection, anything that alters this narrative going forward could see the pound explode higher, particularly since speculative positioning in sterling remains heavily net-short.”