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Brexit without a deal: how to sell a pound

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British Prime Minister Theresa May suspended the process of discussing the draft agreement with the EU presented by her, causing massive sales of sterling.

May acknowledged that lawmakers are likely to refuse to accept the document. According to her, the government will start preparing the country to leave the union without a deal. After speaking, the pound collapsed to its lowest point since June 2017, then continued to decline to $ 1.25. On Tuesday, the pound is trying to show signs of life.OfZKkxOU9E2sUgie6HwfGjfpm5HPRia2bZzdfr9PAccording to banking analysts Mizuho, the aggressive fall of the British currency will not end there. The pound will continue to decline, since the EU members do not intend to revise the deal with the UK on further relations after leaving the bloc in March 2019. The decision of European officials will not affect whether May will delay the holding of parliamentary hearings on this issue or not, according to Mizuho.

With the deterioration of the situation around the "divorce" of the UK and the EU, the pound may fall already below $ 1.25 this week, bank experts predict.

Until the uncertainty regarding the parliamentary assembly is resolved, it is best for traders to sell any rally. Such advice is given in Societe Generale.

The main negative for the pound is the political deadlock and the lack of specifics on Brexit and everything connected with it. At the moment, the prospects for the pound cannot be estimated, write banking analysts. Much will depend on the parliamentary vote or on the development of events in case there will be no voting.

Euro

Falling, the pound drew the regional currency. The political risks and the weakness of the eurozone economy do not give the "bulls" on the EURUSD pair a proper turn. According to researchers, trade wars, the budget crisis in Italy, the unrest in France and Brexit increase uncertainty. The end and edge of these problems are not visible yet.

As for the "American," because of Brexit, investors are trying to hide in dollar assets. However, in terms of monetary policy, nothing has changed. The dollar is on the verge of sales, and even its ardent defender Goldman Sachs is not so sure of tightening the policy in March and warns that the US currency may come under pressure after the deterioration of FOMC forecasts in December. However, the bank continues to believe that greenback will weather the storm and continue to strengthen.mhTXx1u04x6k-Nng1M49qMpzkZ53P7gwiQxWPR1gNow, traders are not in a hurry to sell the dollar, waiting for the Fed's verdict. At the same time, it is worth noting that the slowdown in inflation in America, the ECB's continued optimism and strong data on business activity in the eurozone in December can inspire euro fans to the exploits. The currency pair EUR / USD holds above 1.13, and the chances of renewed bull attacks on the euro remain high.

The material has been provided by InstaForex Company - www.instaforex.com