forex Does the New Brexit Deal Mean It’s Time for GBP Investment?

Anzo Lim · October 21, 2019

UK announced a new Brexit deal

On October 17^th, Thursday, UK Prime Minister Boris Johnson announced that he and EU leaders had agreed on a new version of Brexit deal. The news led to a surge of GBP. Thursday’s GBP/USD hit 1.2987 at its highest of the day and closed at 1.2889, up by 0.48%. Currently, the price is edging towards 1.30.

Optimism and pessimism coexist

While investors are eager to make profits from the pound’s rally, it remains a question whether the new deal will be approved by the British Parliament. It’s worth mentioning that the Democratic Unionist Party (DUP), regarded as a determining force of Brexit, had voiced clear disapproval to the deal, casting a shade of doubt on the Brexit outlook. The waves of skepticism in Britain also led to investors’ hesitation.

Marvin Barth, the Macro Strategy Director for Foreign Exchange and Emerging Market from Barclays, pointed out in his interview with Bloomberg: “The unexpected outcome of the Brexit referendum in 2016 had caused the pounds to tumble over 1,000 points against US dollar, down to its lowest since 1985. Since the Brexit vote, the pound has dropped 13%.”

EU’s Chief Negotiator for Brexit Michel Barnier said he believes the agreement will be approved by late October. For the moment, investors’ main focus is how UK Members of Parliament would react before the Parliament’s emergency meeting on Saturday( October 19^th ).

Phil McHugh, Chief Market Analyst of Currencies Direct, said that if most MPs favor the new Brexit deal, the GBP may continue to rise against USD to around 1.35; but if the deal fails to pass at the Parliament, the pounds may tumble back to 1.22.

Follow the latest trends of the forex market

The forex market is sensitive, and incidents such as changes in a country’s economic policy, inflation and political factors all have direct implications on forex rates. Besides offering broker information search, WikiFX App also make timely and informative updates of forex news for investors to grasp the latest market trends.