Sterling Bounces Briefly After Latest EU Report

The Pound Sterling had earlier rallied against the US Dollar after the release of a media report which said that Britain would be amenable to remaining in the EU’s customs unit after 2021 given the inability for government negotiations to reach a detail. Theresa May, the UK Prime Minister, denied that statement, however, and said that Britain would certainly leave as was outlined by her previously. In the period between the report and the Prime Minister’s disavowal, the Pound edged higher and struck a 2-day high, but was unable to maintain any momentum after the Prime Minister’s announcement.

As reported at 10;58 am (BST) in London, the GBP/USD was trading at $1.3501, down 0.08%; the pair hit a low of $1.35494 in the session but had struck a session peak of $1.3569 before falling back. The EUR/GBP is trading at 0.87459 Pence, a gain of 0.05306%; earlier, the pair had traded at a peak of 0.87505 Pence while the low is at 0.87129 Pence.

Brexit Worries Still Dominate

Analysts say that the Pound’s reaction to the news, albeit false, shows that the Pound will benefit under a scenario which more closely “resembles the status quo.” Concerns over a hard Brexit and the possibility of a hard Irish border are likely to put further pressure on the Pound. While Britain is due to withdraw from the EU next year, a transitional arrangement permitting trading to continue unchanged until 2020 ends was secured.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.