Pound Gains as May's Latest Offer Revives Brexit Deal Chances
(Bloomberg) -- The pound clawed back some ground as U.K. Prime Minister Theresa May said she will offer lawmakers a vote on whether to hold a second Brexit referendum as part of a plan to get her Brexit deal over the line.
Sterling gained the most in more than two weeks before the rally eased as May spoke in London. Lawmakers have already voted against holding a second referendum in a series of choices on Brexit options, though last month there were only 12 votes in it. May is due to put her latest offer before Parliament in early June.
“If the chance is rising for her bill to get through, the pound has some more room to the upside after the last few weeks of selling,” said Manuel Oliveri, a strategist at Credit Agricole SA. “Be prepared for more upside in the short term.”
Sterling has been weighed down this month as the prospect of a more hardline Brexit candidate replacing May has increased the risk of a no-deal exit from the European Union. A second referendum is ultimately seen as one of the best scenarios for the pound, given it could mean Brexit is reversed.
The pound gained 0.2% to $1.2748 by 5.00 p.m. in London, after slumping earlier in the day to a four-month low as senior members of May’s party jockeyed to replace her. Sterling gained 0.3% to 87.54 pence per euro, looking set to break the longest run of losses versus the euro in the history of the shared currency.
May said that the vote on whether to have a second referendum would be conditional on her Brexit bill passing the first voting stage in Parliament. With the Brexit challenge harder than she anticipated, she said she will also give lawmakers a choice on customs arrangements.
--With assistance from Sheldon Reback.
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