Forex – Pound Rises Ahead of Key Brexit Vote

The pound rallied in early European hours on Tuesday after British Prime Minister Theresa May secured last-minute changes from the European Union for her Brexit deal before a crucial vote in parliament later in the day.

The pound was up 0.6% at $1.3230, taking its gains over two days to more than 1.5%. The euro slipped to its lowest against the pound since May 2017 at 0.8471, before recovering the losses somewhat. It was last at 0.8521, down 0.3%.

A lower likelihood of crashing out of the EU with no Brexit deal could help to inject some bullish sentiment into equity markets by eliminating one of the three major concerns of global investors, alongside trade and slowing global growth, said Greg McKenna, strategist at McKenna Macro.

“Take Brexit off the table and I think some of the real money flows that appear to have turned up late last week are likely to be there again. So I think it helps change the backdrop a little bit,” he said.

The euro was up 0.2% on the day at $1.1272 (EUR/USD).  The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.25% at 96.93.

However, the dollar tacked on 0.2% against the Japanese yen to 111.38 on the back of the improved appetite for risk.

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