Pound Outlook Improves in Short Term
Though there are still some hurdles to be overcome as regards the Brexit agreement, the Pound Sterling was trading close to a 5-month high versus the greenback. EU leadership and the British Prime Minister agreed in principle for a deal allowing for exit from the trading bloc. It will be up to Boris Johnson to convince Parliament to accept the terms which, some analysts say, could be easier said than done given the holdout skeptics.
At 10:44 am in Tokyo, the GBP/USD was priced at $1.2859, down 0.2312%, moving off the session high of $1.28971. The EUR/GBP is high at 0.8650 Pence, a gain of 0.0019% and off the earlier peak of 0.86531 Pence. Against the sae haven Japanese Yen, the GBP/JPY pair is trading lower at 139.678 Yen, a loss of 0.2164%.
Britain's Economic Outlook a Challenge
Once the Parliamentary hurdle is overcome, however, economists caution that the Pound is likely to settle into a lower trending pattern. Future trade obstacles and additional trade barriers from other nations will likely result in a further deterioration of economic growth in the UK. That will likely prompt the bank of England to consider an extended period of liquidity.