The British pound has pulled back sharply today after making its biggest 1day gain in nearly 20 years’ yesterday, as fears once again crept in about where Brexit will lead to.
At 7.48pm (GMT) the British currency was trading at $1.2280 against its US counterpart down 0.94 percent from yesterday’s trading.
Although British Prime Minister Theresa May laid a clear path out yesterday for the UK to exit the European union, not everyone was convinced and claim there are still many unknowns on the road ahead.
“Aftertaking the top spot in the G10 currency space on Tuesday, the pound is the worst performer so far today. After the rapturous reception to Theresa May’sspeech, today sterling traders may be taking a finer look at the detail, and concerns may start to arise about Theresa May’s tough line on Europe, saying that she would prefer no deal, rather than a bad deal with the EU after Brexit”.wrote Kathleen Brooks, the research director at spread betting firm City Index,
“This is a key reminder that the pound’s sensitivity to politics is alive and well,and volatility is here to stay.” She added.
Just how far the pound will pull back now is open for debate but some predict that the currency will be back down below $1.20 before too long, but the worst is behind us.
“My sense is that weare going to challenge the $1.20 level before too long again, and 1.15 is not out of the question, but there won't be the kind of weakness for the pound that we saw in the second half of last year," noted Asset manager GAM's group head of multi-asset portfolios,Larry Hatheway.