Sterling rises again on hopes for softer Brexit

Sterling rises again on hopes for softer Brexit

Sterling rose yesterday on tentative hopes that this evening’s vote by MPs will help prevent the UK crashing out of the EU without a deal.

The UK currency rose about 0.3% against the euro to over 89 pence. 

However, the Ftse-100 fell almost 1% as stockmarkets continued to worry about the US-China trade wars and world economic growth.

Last week, sterling had also rallied on the belief that the majority in the Commons who oppose a no-deal because of the potential economic damage it would entail will find ways in the coming days to avoid a hard Brexit

“This rally in sterling will either be a gift for sellers later in the week or the start of something bigger if a no- deal Brexit recedes further into the distance,” said Chris Beauchamp, chief market analyst at online broker IG.

“The market has begun to sense that the sands are shifting in support of the deal. After the twists and turns of the past year, nothing would surprise markets,” he said.

Capital Economics in London said the probability of a soft Brexit was increasingly likely but there was only a 25% chance MPs will approve Theresa May’s withdrawal deal.

“With time running out, an extension of the Article 50 negotiating process and a shift to a sofer Brexit outcome seems increasingly likely, we’d put the chances at 50%,” the economics firm said.

Irish exporters have already had to cope with a 15% drop in the value of the sterling since the summer of 2016, making it less profitable to sell across the Irish Sea.

The two main business groups here stepped up their warnings to UK politicians about the fallout of a no-deal.

Sterling rises again on hopes for softer Brexit

There would be devastating economic consequences if the UK crashed out which would “immediately put jobs and businesses at risk and jeopardise years of positive economic development and integration across the island,” said Ibec and the Confederation of British Industry’s office in the North in a joint statement.

“A no-deal outcome would profoundly exacerbate, rather than resolve the many difficult challenges that Brexit presents.

“These challenges would remain but would have to be addressed in a climate of political chaos and economic upheaval. It is not a prospect that any responsible politician should countenance,” said Ibec director of policy and public affairs Fergal O’Brien.

CBI NI director Angela McGowan said: “Many firms across Northern Ireland simply could not cope with a no-deal Brexit.

“Not only would it do significant harm to jobs, investment and living standards but it would put at risk the all-island economic model that has been an important factor in driving local prosperity.

“Moreover, it brings with it unnecessary risk to the Good Friday Agreement, which has been the foundation of social, economic and political progress,” she said.

In November, almost all the business groups in the North, including the Federation of Small Businesses, the Institute of Directors, and the NI Chamber of Commerce, had also put their support behind the Withdrawal Agreement signed between May’s government and EU chief negotiator Michael Barnier.

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