Does the New Brexit Deal Mean the Time for GBP Investment?

UK announced a new Brexit deal

On October 17th, 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. Thursdays 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.

GBP/USD daily market trend

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%.”

Rating of Barclays on the WikiFX App

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 Parliaments emergency meeting on Saturday( October 19th ).

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.

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