By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
The British pound traded flat on Monday after U.K. Prime Minister Boris Johnson was denied the possibility of trying to get his Brexit deal pushed through Parliament after a vote was frustrated over the weekend.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0569% flattened against the dollar to $1.2981 versus $1.2974 seen late Friday in North American trading. A 5.8% gain in October has kept the pound near levels not seen since May. The FTSE-100 /zigman2/quotes/210598409/delayed UK:UKX +0.82% meanwhile, rose 0.2% to 7,168.29.
After a crucial Parliamentary vote failed to get off the ground on Saturday, Prime Minister Boris Johnson was forced to send a letter to the EU asking for a three-month Brexit delay. Johnson, who is opposed to any delay, wanted to try to win parliamentary approval for his plan on Monday as the Oct. 31 Brexit deadline draws nearer.
However, U.K. House of Commons Speaker John Bercow said Monday afternoon that Prime Minister Boris Johnson cannot hold a new Brexit vote, saying it “would be repetitive and disorderly,” according to media reports. The government will now be left to get the legislation required for Britain’s departure from the European Union through parliament
Goldman Sachs analysts said they expect the deal will eventually pass, and for that reason see the pound rallying to $1.35, though others were more cautious.
“So far, pound traders are content that a disorderly Brexit will likely be avoided in two weeks. Yet an early general election and maybe another Brexit referendum are on the U.K.’s political agenda for the coming months,” said Ipek Ozkardeskaya, senior market analyst, told clients in a note.
As for stocks, the analyst said ongoing Brexit uncertainties could trigger volatility as that end-month deadline nears. And “small, midcap stocks would be more exposed than the blue-chip stocks which benefit from dollar denominated revenues,” said Ozkardeskaya.
Banking stocks led the gain, which analysts attributed to a belief that a no-deal Brexit would be averted. Lloyds Banking Group PLC /zigman2/quotes/200709414/composite LYG -0.76% /zigman2/quotes/202285510/delayed UK:LLOY +1.32% rose 2%.
Shares of Smith & Nephew PLC /zigman2/quotes/207176500/delayed UK:SN -1.18% slid nearly 5% after the medical device maker said Chief Executive Namal Nawana will step down at the end of the month and be succeeded by Roland Diggelmann.