Pound at highest since May and stocks surge on Brexit deal hopes | Business News


The pound has jumped to its highest level against the dollar since May after an unconfirmed report that a draft Brexit deal with the EU may be close.

Sterling surged against the US currency and the euro, while UK banking and property stocks also spiked, when the financial news service Bloomberg, citing sources, reported that negotiation teams were nearing a draft agreement.

The market sentiment mirrored gains on Friday on similar expectations of a breakthrough – only for investor hopes to ebb away when trading resumed on Monday morning.

The pound’s performance since the 2016 Brexit vote has followed a consistent path in that it has achieved support when the prospect of a smooth Brexit has been seen as more likely.

Sterling jumped by more than 1% against both the dollar and the euro – trading as high as $1.2795 and €1.1588 before the rally ran out of steam.

Stock markets across Europe were also boosted.

The internationally-focused FTSE 100 erased losses seen earlier in the day to close only one point down as its UK-focused constituents put on some fat.

Land Securities and British Land were the main beneficiaries of the gains, closing 6% and 5.4% higher on the day.

Lloyds Banking Group and RBS were up by as much as 6% but ended the session just over 5% higher.

The second tier FTSE 250 Index closed 1.3% up.

Sterling was trading at $1.50 before the referendum result was declared in 2016

Neil Wilson, chief market analyst at Markets.com, said of the reaction to the Bloomberg (BBG) claim: “These kind of reports expose just how vulnerable sterling is to headline risk.

“At present these are unconfirmed reports and need to be verified – we just have BBG citing two people with knowledge of the talks.

“If a draft deal can be achieved we would expect another spike north to $1.30 on cable in very short order, and potentially $1.3170 could be targeted. It could get very choppy now.

“However, as we consistently stress, there is yet a lot to overcome even if a deal is agreed – most importantly parliament would need to back the agreement and this is far from assured.”


Source link


Please enter your comment!
Please enter your name here