Pound Bows as the Possibility of a Hard Brexit No-Deal Resurface

In the past week, after Boris Johnson was declared the winner of the December 12 UK elections, Sterling had a wild run in the hope of an easier Brexit pass. The same may not hold for Pound as during the week, with its market activity, analysts had foreseen it may not trend higher.

In the early hours of today, the pound slid by 0.6% to trade at $1.3260 from a previous market price of $1.3335 standing at a negative of 1.17%. This could be attributed to new reports coming in that the newly elected government has plans of stopping another Brexit extension further than next year and is making moves to legally back it up.

This move as seen could result in a hard Brexit. The period of a wait after Brexit could be stretched by up to 2 years if both parties, the European Union and UK consent, but in the face of a revised WAB which will be passed by British MPS this week, that might be an exception.

Analysts had assumed the chances of another Brexit extension given the normal duration of close to 2 years of a post Brexit waits.

The recent move of a revised withdrawal agreement bill setting a new December 31st, 2020 deadline narrowed the chances of such an extension.

The FTSE-100 index UKX, standing previously at -0.05% fell by 0.1% at the beginning of the trading session.

More Pressure on the Pound
Unfavorable PMI figures from the private sector released earlier had weighed on the Pound. Market moving stats that will impact on the Pound are October wage growth and unemployment stats.

Due out also is November’s claimant count figures which will be most impactful on the Pound.

Geopolitics will also weigh on the Pound as in the face of a year transition planned by the UK Prime Minister, Boris Johnson, the time frame may be too short to draft a reasonable trade pact which may lead to tariffs imposed on UK goods.

In another perspective to this move, it seems that Boris Johnson is preventing a drag in the Brexit negotiation with the new deadline set, so events may move faster than anticipated.

Currently, the Pound’s standing is at $1.3149,-0.48%.