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Volatile pound regains some ground

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The pound has rebounded in afternoon trading in response to a report that the main elements of a Brexit treaty text are ready to present to the UK cabinet on Tuesday.

Sterling regained some ground after a Financial Times report cited the EU’s main Brexit negotiator, Michel Barnier.

The pound turned positive against the euro, up 0.17% on the day at €1.1466.

Against the dollar, it recovered partially to stand 0.43% lower at $1.2918.

Mrs May is trying to rally support among cabinet ministers for her Brexit proposal in time for a hoped-for summit in Brussels later this month.

British Pound against US Dollar

However, the pound sagged in morning trading amid indications that her efforts had been delayed by increasing disarray in her cabinet over the issue.

On Friday, Transport Minister Jo Johnson became the latest government figure to quit his post over Brexit, arguing that UK was “on the brink of the greatest crisis” since World War Two.

Simon Derrick, head of currency research at Bank of New York Mellon, told the BBC that the pound’s weakness against the dollar was “obviously related to the uncertainty over the weekend”, but added: “At least half of it is actually about dollar strength and the expectation that the Federal Reserve will hike interest rates in December.”

The resurgent dollar also hit the euro, down 0.6% against the greenback on Monday to $1.1265, having earlier touched a 17-month low.

Monex Europe analyst Bart Hordijk blamed the euro’s weakness on “the four apocalyptic horsemen” of “Brexit, Italy, slower growth and a cautious European Central Bank”.

He forecast that the euro could fall further against the dollar.

“Signs are certainly dire for the euro and a drastic change of monetary policy signalling, the Italian budget stance, macroeconomic prospects, or Brexit is what the currency needs now to turn this momentum around,” he said.



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