The British pound rally over the last week came to an abrupt end after a mixed day in the British parliament yesterday which still left many questions surrounding the saga regarding Brexit and casting doubt on whether the UK will be able to leave the EU as planned by the end of the month
The British Parliament voted by 329 to 299 in favor of Prime Minister Boris Johnson’s Brexit plan, but less than 5 minutes later then opposed the PM’s timetable to put together legislation to quickly exit the EU by October 31st by 322 to 308 votes.
The EU will now need to grant an extension regarding the Brexit progress which many see as a foregone conclusion which will see he process drag out
According to some analysts the divorce deal will eventually go through and these thoughts should keep the pound well supported and any pullback in the British currency may be a good buying opportunity.
“We would buy dips, our view remains that Johnson is not a no-deal Brexiteer and that no-deal risk on Oct. 31, or indeed ever, remains relatively low,” said Adam Pickett, a foreign-exchange strategist at Citi bank.
Even on an election, the two most likely outcomes are Johnson getting his deal through with a majority or that a coalition leads the U.K. to ultimately remain in the EU, and “both of those outcomes are sterling bullish in the medium term.”