The British Pound has recovered some of its recent losses, closing 0.6% higher on Wednesday, October 12 at $1.22, but down from its best levels for the day, BBC News reports.
Against the euro, the pound rose nearly 1% to close at €1.11, with analysts attributing the gains to the promise of a Commons debate on the Brexit process.
Sterling has been sliding since Prime Minister Theresa May announced on 2 October that the formal Brexit process would start by the end of March 2017.
Traders have been selling the pound, fearing the impact of leaving the single market. According to figures from the Bank of England, on Tuesday the pound fell to its lowest level in history on a trade-weighted basis.
The trade-weighted index measures the pound against a basket of currencies, adjusted to reflect the importance of nations as trading partners.
MPs have been demanding to scrutinise the eventual plan to leave the European Union before it is finally agreed, and on Wednesday the government agreed there should be a “full and transparent debate.” But it added that the process should not “undermine” the government’s negotiating position.
“After weeks of tough rhetoric pushing sterling into a trading environment closer to an emerging market currency, the government may aim to stabilise markets, with its rhetoric and suggestions now possibly shifting in tone,” said Morgan Stanley’s head of currency strategy, Hans Redeker.
“However, there is a fine line to walk as [Mrs] May’s Conservative Party wants a clean split from Europe. In addition, giving in too much, even before Article 50 negotiations have started, shifts the negotiation advantage towards the EU. Hence, the pound’s rebound should be limited and followed by a decline,” he added.
The subject of Brexit dominated the first Prime Minister’s Questions since the end of the party conference season.
Mrs May told MPs any deal would aim for “maximum possible access to the single market”, but added she was “absolutely clear that the British people” wanted “maximum control” over immigration.
Analysts warn that the uncertain political situation will continue to make the pound volatile. The FTSE 100 share index has fallen back after a recent strong run, which has been partly helped by the weaker pound.
