How have fading Brexit breakthrough hopes affected pound sentiment?

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Fading Brexit hopes and political pressure have driven sterling to a two-month low.

Sterling has fallen to its lowest point in two months, reaching $1.2943, as prospects for a resolution to the Brexit impasse dim. Prime Minister Theresa May is facing increased pressure to resign amidst stalled negotiations between the government and the opposition Labour party. This sentiment is further exacerbated by growing disillusionment regarding the likelihood of a compromise.
Stalled Negotiations and Mounting Political Pressure

Talks between the ruling party and the Labour party have yielded minimal progress, contributing to a sense of deadlock. Weekend media reports indicated that the pressure on Prime Minister May to either find a resolution or announce a departure date was intensifying. The Financial Times reported that May was planning to hold a new vote on her Brexit agreement in the upcoming week, a move seen as a high-stakes attempt to break the parliamentary stalemate.
Analyst Concerns Over Compromise and Sterling's Trajectory

Currency strategists have expressed concern over the diminishing chances of a compromise. Jane Foley, a currencies strategist at Rabobank, noted a widespread disillusionment regarding the possibility of a negotiated settlement. Foley suggested that the continued negative headlines surrounding Brexit could lead the pound to test its February lows of $1.2775. This outlook is compounded by a broad rally in the US dollar, which has also exerted downward pressure on sterling.
Impact of Extended Uncertainty on the Economy

While an agreement to delay Britain's departure from the European Union by up to six months had previously reduced immediate risks of a no-deal Brexit and lowered sterling's volatility, the prolonged uncertainty is now having a discernible economic impact. The six-month extension has brought into sharp relief the economic cost associated with this extended period of indecision. Even positive economic data, such as stronger retail sales and slower inflation reported last week, failed to significantly boost the pound, underscoring the dominance of Brexit-related sentiment in currency markets.

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How have fading Brexit breakthrough hopes affected pound sentiment?

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