'Last Brexit gamble' of Theresa May puts sterling on volatile path

'Last Brexit gamble' of Theresa May puts sterling on volatile path

The "last gamble" of Theresa May to get a Brexit deal through the Commons sent sterling briefly soaring fears that this fourth attempt too will fail, weighed on the currency again.

After a volatile session, the pound ended little changed on the day, at 87.64 pence. Her offer of a second referendum to secure UK parliamentary support for her withdrawal bill was the “last throw of the dice for Theresa May”, said Lee Evans, who is head of foreign exchange trading and strategy at Bank of Ireland.

“However sterling strength was short-lived,” he said, as “a vote for a second referendum – supported or not – along with a vote on a Customs Union is unlikely to get support from Brexiteers while concessions to the DUP may or may not be enough to gather support,” Mr Evans said.

Joshua Mahony at online broker IG said Ms May’s pitch will have to draw support from both the Labour Party as well as Tory MPs. “May knows that this is likely to be her final attempt to get a deal across the line, and with Brexiteers jostling for her position, there will be many who know that the Brexit process could well shift radically towards a harder form of Brexit if she loses,” he said. The Ftse-100 in London rose by 0.25%, while European stock markets gained by over 0.5%, as some of the heat in the global trade war between China and the US was turned down.

In a report, the OECD said Ireland’s “robust” economy was vulnerable to Brexit and to potential overheating of the property market. It urged the Government to take extra vigiliance despite regulators boosting mortgage lending rules and raising levels for banks to carry additional reserves.

“Property prices remain high, despite having moderated recently, both in the housing and commercial property sectors,” the OECD said. “Foreign investors account for more than half of commercial property investment in Ireland. They often obtain funding from outside the Irish banking sector, but they still leave the Irish property market vulnerable to rapid changes in prices, and open up new channels for the transmission of external shocks,” the report said.

Irish GDP will grow 3.9% this year and by 3.3% in 2019, down from 6.8% in 2018, it projects. “To further improve the fiscal position, the government should eliminate expenditure overruns, which have been significant in some sectors, notably in health, over the past years.”

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