LONDON, Oct 31 — The pound rose today and could score its biggest monthly rise in more than a decade as the combination of a weak dollar and the falling risks of Britain leaving the European Union without a deal has fueled demand.
While the immediate catalyst for the pound’s gains was a cautious US Federal Reserve who kept the door open for further policy easing after cutting interest rates for the third time this year, the broader base for the pound’s rally this month was some progress on the Brexit deadlock.
British Prime Minister Boris Johnson, who has failed to deliver on his “do or die” promise that Britain would leave the EU on October 31, secured agreement for an election on December 12 after the EU granted a third delay to Brexit.
The Conservative Party holds around an eight-point lead over the opposition Labour Party, according to a Survation poll conducted by the Daily Mail.
In its latest updated forecasts, Morgan Stanley and Goldman Sachs put the risk of a no-deal Brexit at a low five per cent and assign a 75 per cent probability of a deal followed by the likelihood of 20 per cent for Britain opting to stay within the European Union.
Against the greenback, the pound rose 0.3 per cent at US$1.2941 (RM5.41) and closing in a five-month high above US$1.30 hit last week. Versus the euro, the pound has gained 0.2 per cent.
The pound has strengthened more than five per cent against the dollar so far this month, its biggest monthly rise since May 2009, according to Refinitiv data.
The Fed lowered its policy rate to 1.50 per cent-1.75 per cent, but dropped a previous reference in its statement to “act as appropriate” to sustain the economic expansion. — Reuters
