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Sterling trims losses after May party show loyalty on Brexit

LONDON (Reuters) – The pound rose above $ 1.29 on Thursday after a show of support for Britain's Prime Minister…

LONDON (Reuters) – The pound rose above $ 1.29 on Thursday after a show of support for Britain’s Prime Minister Theresa May from his conservative party, subdued fear of an immediate leadership challenge over her Brexit strategy.

PHILPHOTO: British five-pound notes.November 14, 201

7. REUTERS / Benoit Tessier / File Photo

The prospects for divorce divorce between the UK and the European Union have weakened sterling in recent days and on Wednesday the currency fell to seven week’s low versus dollar.

But the lack of voices that openly dropped May when she addressed conservative legislators on Wednesday night spread out speculation that she could soon be tipped.

At 0815 GMT, sterling rose 0.2 percent to $ 1.29 and flat against the euro at 88.36 pence.

Still, investors say that with just over five months until Britain leaves the EU, the risk of Brexit being missing and hence the prospect of further sterling losses is dropped.

“Domestic policy has risen and the dense dynamics will make it difficult for May to get a possible agreement through Britain’s parliament,” said Alexandra Dumitru, economist at the Rabobank.

“We still consider a last minute deal as the most likely result, but due to recent events, we now calculate the chances of a” hard Brexit “almost as high as the base case.”

Disagreement over a fallback plan for the border between the Northern Ireland Northern Ireland and the EU Member State Ireland is the main focal point in the Brexit call.

“In May, the pound would see a wave of selling in the short term, as her substitute could increase the chances of a no-deal Brexit,” said David Cheetham, chief market analyst at XTB.

But the pound “remains more sensitive to good news than bad, which could mean a rather sharp step higher if an agreement was to be reached.”

Sterling briefly rose half a percent against the dollar and the euro Tuesday after a media report that the EU can offer Can a British Customs Union pass a Brexit deal.

Reporting by Tom Finn; Editing Mark Heinrich

Our Standards: Thomson Reuters Trust Principles.

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