Britain’s plans to leave the European Union could be thrown into disarray by a vote in parliament later on Tuesday but bets are mounting that a chaotic no-deal Brexit can be avoided and that sterling will rise from here.
After slumping 7 percent in 2018, the pound has started the year on the front foot. It scaled $1.29 on Tuesday, hours before British lawmakers are due to vote on the withdrawal agreement Prime Minister Theresa May negotiated with the EU.
They are expected to reject the deal, barely 2-1/2 months before Britain is due to leave the bloc, opening up a range of outcomes, from quitting with no agreement on future relations to halting Brexit altogether.
But even amidst the tumult some investors are starting to view medium-term sterling valuations as decently priced, market positioning overly negative and the dollar topped out.
They reckon the chances of a no-deal Brexit — long seen as the worst case scenario for the pound — are diminishing as parliament exerts greater control over the process.
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