Sterling reduces losses after May party loyalty on Brexit

LONDON (Reuters) – The pound climbed above $ 1.29 on Thursday, after a demonstration in support of British Prime Minister Theresa May on behalf of his conservative party, which eased fears of an immediate challenge to management regarding its strategy for Brexit.

The prospect of seeing the policy compromise the divorce agreement between Britain and the European Union has weakened the pound sterling in recent days and Wednesday, the currency has fallen to a seven-week low against to the dollar.

However, the lack of openly defying voice May, while she was addressing conservative lawmakers Wednesday night, helped prevent her speculation that she could soon be overthrown. .

At 08:15 GMT, the pound sterling rose 0.2% to $ 1.29 and remained unchanged against the euro at 88.36 pence.

Nevertheless, according to investors, there were only five months left before the exit of the European Union from Britain, so the chances of a Brexit without a transaction increased, resulting in further losses in sterling.

"Domestic politics has picked up steam and heavy momentum will make it difficult for May to conclude a possible agreement by the British Parliament," said Alexandra Dumitru, an economist at Rabobank.

"We still consider a last-minute deal as the most likely outcome, but due to recent events, we now estimate that the odds of a" difficult Brexit "are almost as high as in the scenario of based."

Disagreements over a retreat on the border between the British province of Northern Ireland and Ireland, a member of the European Union, constitute the major blocking point of the Brexit negotiations.

"If May flipped the pound, there would be a wave of short-term sales as its replacement could increase the chances of a Brexit without a transaction," said David Cheetham, senior market analyst at broker XTB.

But the book "remains more sensitive to good news than bad, which can mean a rather strong rise [Brexit] an agreement is found. "

Sterling briefly earned a half percent Tuesday against the dollar and the euro after a media report that the EU could propose to May a customs union on the UK scale to conclude an agreement on Brexit.