Sterling still in the limelight as deal hopes hit snags

Published date: 16/10/2019

Yesterday's run-up in the Pound was clearly on the back of comments coming out of the EU that a deal was indeed possible, and potentially by the end of the week.  However, in order to achieve this, UK PM Boris Johnson has had to make a number of concessions, which have been met by disapproval by certain members of the current government and its partners.  

As we noted yesterday, the DUP - who offer the government a confidence and supply agreement on key issues - have voiced their disapproval to anything that takes Northern Ireland out of the UK customs union for any period of time.  It seems one of the concessions offered by Boris Johnson goes against this and may well scupper any deal going through in the House of Commons.  

The concessions are also said to have caused some major splits within the Brexiteer camp, with ERG members in meetings to discuss the viability of the deal.   Needless to say, when it comes to voting on any prospective deal, there will be plenty of uncertainty over whether this will pass through parliament with opposition parties already openly against any Brexit of any kind.  

Gains in Sterling have been reined in as a result, and any hope of pushing through 1.2800 in Cable looks remote at best in the near term.  Indeed, since pulling back into the mid 1.2700's, sellers have taken control further still and we are not testing through 1.2700 at the time of writing.  

EUR/GBP has also pushed higher again and having held off a move towards 0.8500, we are now looking at a potential return above 0.8700.


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