Sterling remains sensitive to Brexit movement with the Prime Minister facing an uphill struggle later on Friday with MPs set to vote on part of her deal, as opposed to the whole thing and making it different to a “meaningful vote”. The pound has also been knocked by disappointing property price data, showing average house prices in England have recorded their first annual fall since 2012. Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said a Brexit deal would help to release pent-up housing market demand. As of 08:50AM UK time, the pound has creep back over €1.16 and is trading at €1.1607 having earlier fallen to €1.587.
Against the US dollar, Sterling is trading at $1.3026 after recovering losses from $1.3011.
Today will see MPs consider the withdrawal agreement, which is the legally binding “divorce deal” and covers the UK’s exit from the EU.
MPs will not vote on the political declaration element which is non-legally binding and looks at the future relationship Britain will have with the bloc.
The withdrawal agreement deals with matters such as the transition period after the UK formally leaves the EU as well as proposals for the controversial Northern Irish backstop.
Under the terms of an agreement with Brussels, if passed by MPs on Friday the vote would qualify the UK to be granted an automatic delay to May 22 of the formal date of Brexit.
Mrs May’s move allows the Government to present the situation as a choice between a short delay to and the potential for a much longer one which would mean taking part in European Parliament elections.
But it would not let Parliament go ahead and ratify the withdrawal deal, as legislation allows this only after the passage of a “meaningful vote” on both the withdrawal agreement and a political declaration on the future relationship.
Connor Campbell, analyst at Spreadex, said: “The pound fell 0.3 percent against both the dollar and the euro, leaving it under $1.32 and €1.16 respectively.
“Given the Brexit focus, it’ll be interesting to see whether the day’s data – including the UK’s final Q4 GDP reading – will have any major impact on the currency.”
George Prior, founder and CEO of deVere Group, said the pound could rise if the deal is passed today.
Nigel Green notes: “MPs will vote today on whether to accept the Prime Minister’s version of Brexit, face crashing out without a deal on 12 April, a much longer extension, or a general election.
“Since she vowed to quit, if has she gathered some more support in parliament, there is seemingly a gradual shift towards Mrs May’s plan as it will allow the UK to leave in, supposedly, a more orderly manner.”
He continues: “Should the PM’s deal pass on Friday, sterling will rally and the economy will have a growth spurt as pent-up household spending and investment kicks in.
“Domestic-focused small and mid-cap stocks would outperform large caps in a stock market rally.”