Sterling facing reality as traders wait for Brexit plan B

The longest series of sterling gains in a year is facing a moment of truth today, while Theresa May is to unveil her Plan B on Brexit.
Sterling just finished a fifth weekly gain against the dollar, backed by speculation, the Prime Minister will have to adopt a Brexit plan that keeps the UK closer to the European Union in order to gain power over the Parliament . Signs of compromise may encourage more cautious investors to join the rally. But another confrontation may tarnish the mood and justify the decision of some traders to keep their powder dry.
"Given the hurdles of the next few weeks, the cable has generated a lot of optimism," said Vasileios Gkionakis, global head of monetary strategy at Lombard Odier Bank & Co. SA. He expects Plan B to be "A Plan A with some cosmetics", which could mean that some of this optimism will be out of date.
The pound rose 0.4% last week to about $ 1,2900, bringing its five-week gains to more than 2%. This is the longest progression of the currency since January 2018, when it had risen for six consecutive weeks.
Sterling's gains were made despite the complete absence of the May divorce agreement in parliament. The motto is strengthened in the hope that a Brexit without agreement is eventually avoided and that a solution is found at stalemate. The nature of this solution remains unclear, although a survey by Bloomberg last week showed that strategists had a 50% chance that Britain would extend the deadline on March 29 to leave the EU. .
The rise in the pound has resulted in a decline in the index which measures the expected fluctuations of the currency. The implied volatility of the British pound over a three month period was about 11% Friday, its lowest level since November 13th.
Gkionakis said traders should not be left behind as Britain heads for a period of prolonged uncertainty. UBS Global Wealth Management and Amundi SA, the largest fund manager in Europe, which manages 1.4 million euros ($ 1.6 billion), are also among those who remain cautious.
The political stalemate suggests that Parliament may take control of the process. May has so far refused to give in to her major Brexit claims and failed multiparty discussions. After opposition leader Jeremy Corbyn's first attempt to overthrow the government by a vote of no confidence, the risk he may try again also exists, according to the Canadian Imperial Bank of Commerce.