The British Pound faced a setback as British lawmakers rejected Prime Minister Boris Johnson’s latest Brexit deal proposal, causing a drop in the currency’s value.
Despite a brief rally of over 8% in early September, currency experts had cautioned that the Pound’s upward momentum depended on the government’s success in Brexit negotiations. The recent defeat in the British Parliament led to a 0.8% decline against the US Dollar, followed by a partial recovery. The Pound’s decline was partially offset when the government initially secured support for Johnson’s proposal, which also allowed for a potential extension of the October 31st Brexit deadline. Johnson had warned of scrapping the deal if it didn’t receive parliamentary approval.
The latest setback in the British Parliament has made it increasingly difficult to finalize Johnson’s deal before the looming Brexit deadline in just one week. Concerns are mounting that the markets could face a tumultuous Halloween in the UK if the country exits the EU without an agreement. Key UK industries, such as financial services, auto manufacturing, and import-export sectors, are anticipated to bear the brunt of the fallout along with the Pound.
