'If the market realizes that the hard Brexit probability starts to shrink, I think the pound can come back. So we're probably going to trade north of $1.30, $1.35, somewhere there,' UBS investor Dominic Schnider said on Wednesday.
Recent sterling lows have been attributed to Johnson's insistence on Brexit.
"In our view, Johnson's desire to push for Brexit, deal or no deal, increases the chance of an early general election and some possibly nasty GBP outcomes," Rodrigo Catril, senior foreign exchange strategist at National Australia Bank,A reduced probability of an upcoming British election, due to disagreements on Brexit between Parliament and Johnson, could also give the pound a lift, Schnider told CNBC.
However, he noted that it wasn't necessarily the election's outcome that would make a difference to sterling. What's more important for traders, he said, is the sentiment about whether "the U.K. and European Union jointly try to solve this issue and not depart in an unfriendly way." A "no-deal" Brexit, which investors are concerned will happen come Halloween, will mean the U.K. leaves the European bloc without reaching a formal deal. That is, there would be no transitional period for the British government to negotiate free trade deals. Many have suggested such a disorderly exit risks damaging the U.K. economy.
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