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Pounds volatile in further Brexit turmoil



  Pounds and euros Copyright copyright
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The pound has made gains in the foreign exchange markets after Prime Minister Boris Johnson lost his majority in the House of Commons.

Tory MP Phillip Lee's deportation to Liberal Democrats lifted sterling to over $ 1

.20 and € 1.10.

Earlier, the pound had touched the lowest level since October 2016 before recovering from deleting today's loss.

Rebel Tories and Labor MPs want to give a bill to stop Britain leaving EU on 31 October without agreement.

No. 10 has threatened a swift election on October 14 if MPs succeed in seizing control of the Commons business.

Speaking to parliament Tuesday afternoon, Johnson said that if they managed to block a deal without a deal, it would "ruin any chance of negotiating a new deal."

The bill would force the prime minister to ask for Brexit to be delayed until January 31, unless MPs approved a new deal, or voted for an exit deal by October 19.

Under Johnson, the government has sharpened its stance on a non-agreement Brexit, which it has said is "now a very real prospect".

Excludes the so-called "flash crash" in October 2016, when the pound briefly fell sharply to $ 1.15 against the dollar before it quickly rebounded, the pound has not traded regularly below $ 1.20 since 1985.

The pound traded to about $ 1.50 against the dollar before the EU referendum in June 2016.

Pound v Dollar

Jane Foley, senior currency strategist at Rabobank, told the BBC's Today program that although everything made Brexit less likely, would increase sterling, a choice would have the opposite effect.

"Currencies usually do not like uncertainty. The idea is that it can of course be a no-deal Brexit, which investors do not like. They do not like the idea of ​​the uncertainty or the potential chaos that can lead to," she said.

Pound v Euro

"If MPs manage to block a Brexit without a deal by the end of next month, then it is likely to push sterling up," Foley added.

"That said, political uncertainty and a general election are likely to push sterling down.

" Sterling will remain a very vulnerable currency. "[19659021] Political earthquakes cause inevitable tremors in the currency markets. The currency is largely the belief investors have for the prospect of a country, and with City just a mile or two from Westminster, it is physically impossible for traders to ignore the turmoil.

But does currency fluctuation affect the rest of us? they do – and maybe more than we want to know. A weaker pound, of course, makes holidays abroad more expensive (but cheaper for foreign tourists to visit the UK).

But it also makes imports more expensive, which reduces the cost of our shopping list. for example, food. About half of what we eat comes from abroad. The pound has fallen over 10% against the euro and around 20% against the dollar since 2016.

Large companies have a tea nnds to try to insure or "hedge" against currency movements, but within a few months these changes in price tend to flow through. It is enough to make everyday clips or impulse purchases feel a bit more like a little luxury.


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