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British Pound Softer as Egypt Brexit Deal Breakthrough Hopes Fade

February 21, 2019 12:43 pm | Modified February 22, 2019 11:39 am
Brexit, GBP | BY Charlie Murray

The British Pound has been remaining above key levels against both the US Dollar (GBP/USD) and Euro (GBP/EUR), trading above 1.30 and 1.15 respectively. Sterling strength has become more evident in the lead-up and aftermath of the EU and UK meeting with UK Prime Minister Theresa May and European Commission President Jean Claude Juncker. 

Update: British Pound to Euro (GBP/EUR), US Dollar (GBP/USD) Falls as Brexit Hopes Diminish

The Pound to Euro (GBP/EUR), and Pound to US Dollar (GBP/USD) exchange rates both softened in Friday’s trading session after EU officials sank any hopes that a deal would be made in Egypt over the weekend. Reuters reported an unnamed official had said ‘There will be no deal in the desert,’ referring to the Sunday and Monday meeting. However, Theresa May will also be speaking with European Council President Donald Tusk alongside the meeting which has left a small spark of hope some kind of breakthrough could still be seen.

Theresa May and Jean Claude Juncker Suggest Brexit Progress, British Pound Stabilises

Following the meeting, Theresa May tried to offer some reassurance, saying: ‘I’ve underlined the need for us to see legally binding changes to the backstop that ensure it cannot be indefinite. We’re making progress.’ Both leaders agreed that talks had been constructive, but May only has until the 27th February to hold another vote before she risks losing control altogether.

The Irish backstop has been a major sticking point during the negotiations, and Theresa May’s bid to save her Brexit deal saw her securing guarantees that the backstop would be temporary. This would mean the UK couldn’t remain in the customs union or single market for a prolonged period of time. This is May’s last-ditch attempt to save her deal, and without these legally binding assurances, it’s unlikely her deal would be voted for.

British Pound Exchange Rate Forecast – Brexit Meetings Ahead

A meeting in Egypt of EU leaders (including Theresa May) this weekend has been flagged as potentially significant, and so markets will be keen to see any developments which could determine Brexit’s future and Pound Sterling exchange rate movement.

Meanwhile, the British Pound has been relatively upbeat during this week’s developments and even retained much of its strength when Labour and Conservative MPs resigned. If markets continue to feel Brexit progress is being made, it’s likely the Pound will continue to trade positively. Investors will be watching to see how much more progress Theresa May can make in a short space of time, and whether this Brexit deal will have enough assurances to be voted through–the British Pound could rise or fall significantly on the result.

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