Brexit, pound sterling on Farage's announcement yesterday: that's what he said


In the early afternoon yesterday, the pound set a rise of more than 0.80% against the dollar and about half a percentage point against the euro, rising respectively to exchange rates of 1.2881 and 0.8571. Of course, in October, when it was thought that the Brexit agreement between London and Brussels would be approved by the Parliament of Westminster, the pound bought up to 1.2973 dollars, so it still remains under recent highs.

But what has happened so positive for Her Majesty's change?Brexit without agreement, Johnson has a powerful weapon against the EU called Farage

Nigel Farage, leader of the Brexit Party, denied his own previous statements and announced that he will not present candidates in the 317 seats in which the Tories won in the 2017 general elections. In this way, the front favorable to the exit of the United Kingdom by the European Union it strengthens considerably, while the Labor Party of Jeremy Corbyn, whose fiscal and economic policies in general are feared by the markets, weakens.

The polls already assigned a dozen percentage points of advantage to Labor before the announcement of Farage to the Conservative Party, but since one votes with the uninominal system, in itself this would not guarantee any absolute majority. With the de facto agreement at the polls between Brexit Party and Tories, the goal for Prime Minister Boris Johnson seems more affordable. With the renewal of the Parliament in December, in theory it would have the numbers needed to pass its draft agreement with the EU on Brexit or, alternatively, to exit the EU without agreement. In any case, the uncertainty that reigns supreme since 2016 would be about to end or at least that is what started seriously serving the markets since yesterday.

Pound up, Johnson's quotes go up

The pound earns this year more than 1% against the dollar and 4% against the euro. To be sure, yesterday also benefited from the unexpectedly positive data on the British GDP, up by 0.3% in the third quarter, thus avoiding the recession, given that in the second quarter it was down by 0.2%.

On an annual basis, it has expanded by 1%, the weakest figure since the return to growth in 2010. The Tories have been continuously in the government since 2010, but until 2015 they had to cohabit with the Liberal Democrats and from 2017 they needed support of the Democratic Union Party, the Northern Irish unionist party, to obtain an absolute majority of seats in the House of Commons.

Buy or sell Queen Elizabeth's gilts before Brexit?

If Farage's help turns out to be useful as expected, the UK right would return to governing without the need for alliances in Parliament and this would make the political framework in London less hectic. The Brexit Party for the polls would get around 13-14% on a national basis and its candidates would often go head-to-head with conservatives in colleges where Farage announced that he will not run. Here are the reasons for the reinforcement of the Tories' quotations for the conquest of an absolute majority and of the pound on the less and less probable prospect of Corbyn entering Downing Street.

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