Pound struggles near 21-month low against Singdollar after Brexit setback

Pound struggles near 21-month low against Singdollar after Brexit setback

FILE PHOTO: British five pound banknotes are seen in this picture illustration
FILE PHOTO: British five pound banknotes.November 14, 2017. REUTERS/Benoit Tessier/File Photo

SINGAPORE: The pound struggled near a 21-month low against the Singapore dollar on Tuesday (Dec 11) as investors tried to decide whether British Prime Minister Theresa May's postponement of a vote on her Brexit deal would lead Britain into a chaotic exit from the European Union.

May called off a parliamentary vote on her Brexit agreement to seek more concessions. The move thrust Britain's exit from the European Union into turmoil and pushed the pound down.

Possible outcomes now include a disorderly no-deal Brexit, another referendum on EU membership, or a last-minute renegotiation of May's deal with Brussels.

READ: What next if UK MPs reject Brexit deal?

After falling 1.5 per cent against the Singapore dollar on Monday to as low as S$1.7188 – the lowest since S$1.7183 on Mar 16 last year - sterling gained back some ground to S$1.7319 on Tuesday.

Against the US dollar, the pound fell to as low as US$1.2507 on Monday, a 20-month low, before trading at US$1.2621 on Tuesday.

"The market has priced in a slightly bigger chance for a no-deal Brexit," said Commerzbank analyst Thu Lan Nguyen. "But we will move sideways again until we have a decision of some kind."

READ: May heads to Europe in bid to save Brexit deal under fire

EU WILL NOT RENEGOTIATE

EU chief executive Jean-Claude Juncker said on Tuesday as well that the EU is willing to give Britain further clarifications on its Brexit deal but will not renegotiate the treaty or its protocol on the Irish border.

Addressing the European Parliament in Strasbourg, the European Commission president said he was "astonished" at May's inability to get the package agreed with the EU last month through the British parliament.

Noting that he would meet May in Brussels on Tuesday evening ahead of an EU summit on Thursday and Friday, Juncker said: "The deal we achieved is the best possible. It's the only deal possible. There is no room whatsoever for renegotiation."

"But of course there is room enough to give further clarifications and further interpretations without opening the withdrawal agreement," he said. "The withdrawal agreement will not be reopened."

Juncker repeated that neither side wanted ever to use a "backstop" that would keep Britain in a customs union with the EU in the absence of a better way to avoid extensive border checks between Northern Ireland and EU member Ireland.

"We have a common determination to do everything to be not in a situation one day to use that backstop but we have to prepare," he said. "It's necessary for the entire coherence of what we have agreed. It's necessary for Britain and it's necessary for Ireland. Ireland will never be left alone."

READ: Britain's May says Brexit deal defeat could topple government

Source: Reuters/CNA/aj

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