LONDON, Oct 2 — Sterling rebounded from early lows today as hedge funds covered some of their short bets after Prime Minister Boris Johnson offered only vague details on his Brexit proposals to the European Union at a party conference.

Ahead of Johnson’s closing speech to the Conservatives’ annual conference, the pound weakened 0.5 per cent to US$1.2227 as traders awaited details of what he has billed as his final Brexit offer.

But his speech offered little clarity on what exactly Britain would propose to the EU at a summit this month and only reiterated that if Brussels did not engage with the plan, Britain would not negotiate further and leave the EU on Oct. 31.

“We learned nothing new,” said Jordan Rochester, a strategist at Nomura based in London.

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“But hope is a powerful thing, so for the time being Johnson may make all the noise in the world but he doesn’t have the majority in parliament and no ability to have a no-deal or an election and the power is still in the hands of parliament.”

After the speech, the pound rose 0.3 per cent from the day’s lows to stand down 0.2 per cent on the day at US$1.2282. Versus the euro , the pound was a shade weaker at 88.93 pence.

Many EU diplomats fear Britain is heading towards leaving the EU without an agreed departure arrangement, or another delay, as they say Johnson’s proposals are not enough to get a deal by Oct. 31. Johnson said further delay was “pointless and expensive”.

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With Brexit just a few weeks away, expected price swings on the pound have edged higher in recent days.

Implied volatility on the pound for one-month maturities has nearly doubled over the last three weeks to more than 11 vol as traders anticipate more volatility for the pound.

In comparison, implied volatility for the euro and the yen for similar maturities held around 6 vol.

The pound jumped above US$1.23 yesterday on the back of reports the EU was open to considering a time-limited Irish border backstop – a major sticking points in Brexit talks. The currency then gave up most of the gains when the EU denied this.

“These days anything below a 1 per cent move in the pound is flow-related and nothing else,” Rochester said.

Johnson has been firm that the Oct. 31 Brexit deadline will be met, but parliament has put roadblocks in his way – passing a law that requires him to request a Brexit delay if he fails to secure an acceptable deal at an EU summit starting on Oct. 17.

The law reinforced analysts’ belief that Brexit will be delayed for the third time. JP Morgan raised yesterday the probability it attaches to a Brexit extension to 85 per cent from 60 per cent. It also saw the probability of a no-deal Brexit at 10 per cent, down from 25 per cent. — Reuters