Pound losses capped as ‘Brexit’ hopes linger

Bloomberg

The pound capped losses following a weekend of fruitless Brexit talks on conviction that the UK and the European Union would eventually reach a deal to avoid a chaotic divorce.
Sterling was little changed in mid-morning trading in London as people familiar with the matter said there would be no further attempt to resolve the impasse before an EU summit. The stalemate increases the pressure on leaders to resolve their differences, with Nomura International Plc seeing faster progress being made once the UK budget is out of the way in two weeks’ time.
“Not all is lost, most likely just delayed and will be tied together after the budget this month in the days leading up to the November summit,” said Jordan Rochester, a currency strategist at Nomura. To validate more weakness in sterling would require “further ‘no deal is better than a bad deal’ posturing, or another twist in the domestic political story, both hard to predict, but the bad news is in the price I would argue.”
The pound slipped to a one-week low of $1.3082 before erasing the decline and trading at $1.3158 as of 11:46 a.m. London time. It depreciated 0.3 percent to 88.15 pence per euro. British Prime Minister Theresa May will update lawmakers in Parliament later on Monday, according to a UK spokesman.
The risks to any bullish sterling views include leaders not agreeing on the Brexit divorce terms, as well as UK lawmakers not ratifying such a settlement in Parliament.