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Pound Rise So To Just Fall Again
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The pound climbed against the dollar, set for its biggest advance since the nation voted to leave the European Union, as Prime Minister Theresa May said U.K. lawmakers will get a vote on the final deal for an exit from the trading bloc.
The currency strengthened against all major counterparts as May made the announcement in a speech laying out the government’s Brexit strategy, which involves pulling out of the EU’s single market. Sterling is rebounding from Monday’s biggest decline in a month that reported the main substance of May’s speech without the additional detail on the parliamentary vote.
Despite its gains on Tuesday, the pound remains more than 17 percent weaker since the nation opted to walk out of the EU in the June referendum. The currency’s slump since the vote has pushed up the cost of imported goods, with data released before May’s speech showing that inflation surged at the fastest clip in more than two years.
“The fact that the U.K. Prime Minister Theresa May will put a final Brexit deal to vote in both Houses of Parliament is positive for sterling,” Athanasios Vamvakidis, a London-based strategist at BofAML, said in e-mailed comments. “In order for the parliament to approve it the deal has to be good.”
The pound climbed 2.3 percent to $1.2318 as of 1:30 p.m. in London and touched $1.2347, the strongest level since Jan. 6. The currency fell to as low as $1.1986 on Monday.
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The reaction to May’s speech is a marked contrast to those that followed her previous interventions, which had been seen as a trigger to sell the currency. Sterling fell following her speech at the Conservative Party conference in October, which fanned speculation she was eyeing a clean break with the EU, and dropped to the lowest level since October last week following her first television interview of 2017.
“The final take on this speech is that May has come across very well,” said Stephen Gallo, analyst at BMO Capital Markets. “This, in addition to the economic fundamentals, are good arguments for not being aggressively short GBP/USD below 1.2000.”

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