Pound Sterling fell to $1.2923 in early morning trade as uncertainty around Brexit talks continues to rattle investor nerves. The currency has remained relatively flat against the euro at €1.1360. Theresa May is in Northern Ireland for a second day where she is expected to meet the DUP and Sinn Fein as she steps up efforts for a breakthrough in the pivotal backstop. On Tuesday, the Prime Minister met business and community leaders in Belfast, and said she is seeking “changes” to the backstop in her Brexit deal, as opposed to its complete removal from the UK’s Withdrawal Agreement with the EU.
In her speech, she repeated her “unshakable” commitment to avoiding a hard border in Ireland after Brexit, pledging: “The UK Government will not let that happen. I will not let that happen.”
But asked how she could convince the people of Northern Ireland to accept a Brexit deal which was stripped of the backstop, Mrs May said: “I’m not proposing to persuade people to accept a deal that doesn’t contain that insurance policy for the future.
“What Parliament has said is that they believe there should be changes made to the backstop.”
Theresa May will meet European Commission President Jean-Claude Juncker for further crunch talks on Brexit, but the EU has so far reiterated it won’t move from its stance on the backstop and the Withdrawal Agreement is no up for renegotiation.
On Tuesday, Margaritas Schinas, spokesman for the EU’s executive Commission, told a news conference: “The European Union’s position is clear.
“We are expecting, waiting once again to hear what the Prime Minister has to tell us.”
A new poll conducted by Reuters revealed strategists forecast the pound will gain between two and five percent if Britain secures a divorce deal with the EU but will plunge 5-10 percent in the event of a no-deal Brexit.
Asked what would happen to the currency if Britan leaves with a deal, in a regular monthly poll, the strategists were almost unanimous in expecting it to make gains.
But all of them said the pound would dramatically fall if Britain crashes out of the bloc without an agreement in place.
George Brown, Invested, said: “The rationale would be that markets are going to wait right up until the last possible moment to sell off in terms of how a no-deal might materialise. Markets will hold out for a last-minute breakthrough.
“If that wasn’t to materialise then you will see a big, sharp depreciation.”
Economic experts are also forecasting more turbulent times for the pound over the coming weeks as markets await major breakthroughs in Brexit.
The pound and euro have occupied a range of between €1.10 and €1.16, and Trevor Charley, a foreign exchange strategist at AFEX in London, told poundsterlinglive.com this is unlikely to change in the short-term.
He said: “Sterling prices have evidently been rejected (again) around 1.1600 over recent days – which preserves the broad range here for now at least.
“This re-consolidation pattern extends back toward 1.1000 and thus values are in effect continuing to pivot 1.1300 or so.”