Forex – pound stabilizes after the vote on the Brexit, the dollar slides

© Reuters. – The pound firmed up on Wednesday after the british Parliament has overwhelmingly rejected the agreement on the Brexit signed by the Prime minister, Theresa May, strengthening the uncertainty surrounding the withdrawal of the United Kingdom of the european Union.

The GBP / USD was 1,2862 to 03h54 ET (08h54 GMT) after falling to 1,2667 Tuesday evening.

On Tuesday, the Parliament voted to 432-202 votes against the agreement of May, marking the worst defeat in the parliamentary government of the british history recent.

The pound sterling has lost over 1% against the dollar in the aftermath of the vote, before rebounding after the defeat considerable of may, forcing Britain to look to different options. These options could still lead to dramatically different results, ranging from a referendum cancelling eventually the Brexit in a political upheaval leading to a disorder.

“Although the margin of loss may have been a surprise, the defeat itself was something that the market was for a long time and it seems that the participants to have covered short positions after the vote,” said Yukio Ishizuki, a strategist in foreign exchange at Daiwa Securities.

“The market is now reflected in the extension of the deadline for the Brexit in march. In the longer term, it could be summed up in two scenarios: a “Brexit” without transaction or not to Brexit.”

The deadline for the Brexit is on the 29th of march, but with the time passing quickly, it now seems more likely that the Uk request an extension of the maturity date.

The british pound were little changed against the euro, with EUR / GBP to 0,8874.

The single currency remained stable against the u.s. dollar, the EUR / USD is 1,1419.

The yen, usually sought by investors as a safe haven in times of economic stress, rose slightly against the dollar, with USD / JPY down 0.12% to 108,53.

The dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.18% to 95,50.

Investors “focus primarily on the results of trade negotiations us-china, but it may take a month or more before it becomes clear,” said Ayako Sera, a strategist of market to Sumitomo Mitsui Trust Bank.

“It is difficult for the market to think one way or another, whether it be a rally or a decline, as long as the end result will not be clear.”

The dollar has also suffered pressure due to lower expectations. The federal Reserve will continue to raise rates this year because of the weakness of global growth.

The president of the Fed in Kansas City, Esther George, has called on patience and caution on the interest rate increase so as not to stifle growth.

His comments echoed those of Robert Kaplan, president of the Dallas Fed, who said on Tuesday that the u.s. central bank had the luxury to wait before raising interest rates, and should take advantage of it.

Kaplan and George are the latest Fed officials to join in a growing consensus to leave the rates unchanged until the economic risks are resolved.

– Reuters contributed to this report.

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