Market’s Spotlight Stolen by The Great Britain Pound (GBP)

The pound sterling was demanded mainly by investors on Monday, following Brexit hopes during the European trading session. Previously, Brexit’s development went into a halt as the country get ready for its general election on December 12. However, on Monday, Brexit headlines captured the market’s attention while encouraging investors’ risk appetite.

Brexit Party Leader, Nigel Farage said that his party would not contest in the December 12 general election, although he is highly unsatisfied with Boris Johnson’s Withdrawal Agreement Bill (WAB). The purpose behind that was to avoid the general election to result in a hung parliament, where no single party can obtain the majority vote. 

With the Brexit Party out of the election, PM Johnson’s Conservative Party (Tories) will have a higher chance of winning the election with a majority vote, allowing Johnson to ratify the WAB through the parliament and deliver Brexit once and for all. 

The news brought optimism towards Brexit while promoting the market’s risk-on appetite, causing investors to shift their portfolio from the dollar market as well as safe-haven into the pound market. Gold price fell more than $15 a troy ounce, while pair of GBP/USD surged to its one-week high, slightly below 1.2900 handles.  

However, gains on the pound were still limited as uncertainties still linger around Brexit. With Brexit Party out of the election, the opposition Labor Party, led by Jeremy Corbyn, will also have a chance to be the ruling party if they can convince the majority to support them. Either the outcome, the market remains optimistic towards the possibility of the UK finally leaving the European Union after a 3-year delay.

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