Pound sinks into losses on Brexit deal rejection fears

(London) AFP: Sterling sank into losses in chaotic trade yesterday on fears that Britain’s Brexit draft deal might not win parliamentary approval, having earlier spiked close to US$ 1.30 on news of the agreement.

At 1240 GMT, the pound was down 0.34 percent against the dollar at US$ 1.2788. The euro meanwhile rose 0.69 percent to 86.88 pence.

“After the initial relief that the UK government and EU have done a deal, markets are worried that it still does not have enough support to get through parliament on Saturday,” independent economist Julian Jessop told AFP.

The British currency had earlier been catapulted to five-month peaks as news flashed across traders’ screens that the European Union and Britain have reached a draft Brexit withdrawal deal.

The pound quickly rose more than one percent to US$ 1.2990 before profit-taking set in and the euro slid as low as 85.76 pence.

Prime Minister Boris Johnson will still have to take the accord to a sceptical UK parliament for its backing on Saturday, when it meets for a special sitting.

The pound had already stumbled in earlier Thursday morning trade after Johnson’s allies in Northern Ireland’s Democratic Unionist Party (DUP) pre-emptively rejected the compromise deal.

And, since the deal was announced, the DUP has declared that it was “unable to support” Johnson’s draft accord.

Jessop added: “The DUP remains sceptical, and many hardline Brexiteers will take their lead from them.”