Brexit headlines increase downward pressure on British Pound

Brexit headlines increase downward pressure on British Pound

Another day, another breaking news Brexit story. Occasionally they offer good news, but not Wednesday. The British pound sank further against the US dollar on the latest revelation that no official impact assessment of Brexit on the UK, exists.

By 1455 BST, the British pound was trading at $1.3371, While that’s marginally up from the $1.3361 it hit a short while earlier, it’s much lower than the $1.3538 it touched on Monday.

MPs probe EU negotiator Davis

At a Brexit committee hearing earlier Wednesday, MP Hilary Benn posed questions to Brexit secretary David Davis. They included whether impact assessments of Brexit had been carried out into different economic industries, including the automotive, aerospace and financial sectors.

Mr. Davis’ response was perhaps, a little unexpected. “I think the answer's going to be no to all of them," he said.

Mr. Benn called that “strange” while the Labour and Lib Dems were stronger in their responses.

Labour said it was “a shambles” and the Lib Dems called it an “ongoing farce”.

Brexit secretary Davis went on to say how the usefulness of an impact assessment would be “near zero.”

"I am not a fan of economic models because they have all proven wrong,” Davis said. He also told MPs the Government did have a sectoral analysis, but not a forecast. Davis added that a “very major contingency planning operation" was in place.

Ireland border issue unresolved

The latest headlines helped to erase previous upbeat investor sentiment towards sterling follows news Tuesday, that an initial agreement between the Irish Prime Minister and UK PM Theresa May was not acceptable to the DUP party.

Amid this political strife, analysts at UOB Group has changed its outlook on cable from ‘bullish’ to ‘neutral’.

”The immediate pressure remains on the downside and another down leg towards 1.3350 seems likely,” UOB said in a research note.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.

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