The Pound rebounded on Wednesday after Theresa May gave parliament the chance to debate any Brexit agreement made after negotiations.
The Government announced that it would seek a “full and transparent” commons debate regarding Brexit, and softening the hardline stance that sent the Pound on a downward spiral last Sunday. The Sterling showed some signs of recovery on Wednesday, rising 0.6 percent against the dollar, and 0.9 percent higher against the euro at €1.1068.
Last week Theresa May’s dismissed any differentiation between ‘hard’ Brexit and ‘soft’ Brexit’ in her Conservative party speech, causing the Pound to plummet to a 31 year low. Markets reacted nervously at the news that the government may pursue a hardline stance in Brexit negotiations, potentially jeopardising Britain’s access to the single market and having serious ramifications for the British economy.
However, the Government have today agreed that a parliamentary debate on the matter will occur before negotiations formally take place, in spite of May’s intended 2019 Brexit delivery date. This is a step forward in terms of the maintenance of a certain quality of democracy amid Brexit negotiations – after concerns were raised by both Conservative and Labour MPs about the ambiguity of May’s intended action.
Despite the slight indication of recovery for the pound, some analysts have still warned of further market turbulence ahead.
“It would appear that trying to find a floor for the pound is going to be difficult in the short term, simply due to the amount of political uncertainty being generated on both sides of the Channel, as both sides dance on the edge of the volcano, in laying out their negotiating positions, which for now appear a long way apart,” Michael Hewson, chief market analyst at CMC Markets told the BBC.
Neil Wilson, a ETX Capital market analyst remarked: “If traders think the mood is turning bullish for the pound, they’re mistaken. The bears are still very much in control and this relief rally looks like a dead cat bounce. It could just be a short pause before sterling takes another leg lower towards $1.20.”