JP Morgan: Passing May’s Brexit Deal Would Make Sterling Rise

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JP Morgan said that the sterling would rise by at least four percent if parliament chooses to approve the Brexit proposals of Theresa May, the British Prime Minister, in a planned vote that is scheduled next week.

The asset management wing of the bank also warned about the possible impact of extending Article 50, something that the government has already ruled out.

The EMEA chief market strategist of the fund manager, Karen Ward, said that avoiding a no-deal Brexit would allow the Bank of England to increase interest rates, pushing the sterling upwards.

In the comments that was reported by the Telegraph, Ward said that extending Article 50, the legal mechanism through which the United Kingdom is negotiating its withdrawal from the European Union, would result in a “worst-case scenario” situation.

She stated: “Where we’re stuck in the UK is we want to have access to the EU [single market, customs union] in some way … but we want to be sovereign.”

She added: “That’s impossible. We could talk about it for the next 10 years but you cannot square that circle.”

She continued:“A lack of investment, paralysis in the corporate sector is just not good for the economy. That’s why I say it is my worst-case scenario because I don’t see what it provides us in reaching a clear, final outcome that provides certainty for businesses.”

Speaking in the Commons today, Sir Keir Starmer, the shadow Brexit secretary of the Labour Party, said that examining the possibility of extending Article 50 “may well be inevitable now.” It comes after the government was defeated for the second time in two days.

The European Court of Justice has ruled that the United Kingdom could unilaterally revoke Article 50, disproving the dichotomy between the deal of the Prime Minister and a no deal which the Prime Minister had previously suggested.