British pound strengthened after an indication of change regarding Brexit

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Recent political developments in the United Kingdom of Great Britain and Northern Ireland indicate the possibility that the country may eventually remain in the European Union (EU). Jeremy Corbyn, the British Labour Party Leader, might provide a chance of a different outcome rather than so-called hard Brexit. As the leader of the strongest opposition party in the British Parliament, Corbyn has asked the rest of the parties to support a motion of confidence against Prime Minister Boris Johnson to prevent the UK leave EU without an agreement on 31 October, 2019.

The newly elected Prime Minister Boris Johnson does not conceal the fact that as of 31 October, 2019 he intends for the UK to leave EU, with or without an agreement in place. As the date gets closer, more negative information about the extent of damage to the UK economy, problems and confusion for the UK citizens living in the EU but also vice versa, are emerging. In light of these factors the foreign exchange (Forex) market significantly reduced the pound exchange rate against other world currencies and especially against the US dollar (USD), when it traded at a mutual exchange rate of US$ 1.20 per GBP.

On 15 August, 2019 at 10:41 am CET the GBP/USD currency pair traded on the Forex market at a mutual exchange rate of US$ 1.2079 for GBP with the GBP daily appreciation of + 0.17% against the USD. At the same time, the British pound (GBP) also strengthened against the euro (EUR) by + 0.14% with the exchange rate being GBP 0.922 per EUR.

As already mentioned, the British Labour Party Leader, Mr. Corbyn, wants to overthrow the new Prime Minister, Mr. Johnson, to prevent the UK from leaving the EU without an agreement, or to prevent it from leaving the EU at all. Mr. Corbyn has already approached some Conservative members of Parliament to help him implement his plan. “Our priority should be to work together in Parliament to prevent a deeply damaging No Deal being imposed on the country,” Corbyn said in the letter he sent to opposition leaders and rebellious conservatives. This effort subsequently led to a positive recovery of the British pound exchange rate on the Forex market. However, analysts and financial strategists remain skeptical in regard to the GBP and estimate the exchange rate to be around US$ 1.16 per GBP, or lower, in the case of hard Brexit taking place.

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