Fundamental Comment

Pound hits new high on Brexit deal, what’s next?

Pound hits new high on Brexit deal

The pound hit a new five-month high on Thursday after the U.K. and EU said they have reached a Brexit deal, but it snapped some of its gains on worries the British Parliament may reject the agreement.

As of 11:10 GMT, the British pound surged against the U.S dollar to a high of 1.2989, the highest level since May 13, but surrendered some of the gains to trade at 1.2861.

Against the euro, the pound pushed the EURGBP pair to a low of 0.8574, the lowest level since May 8, while it is meanwhile trading higher at 0.8643.

U.K. FTSE 250 index surged 0.5 percent to 20,288.92.

EC Chief Jean-Claude Juncker and UK Prime Minister Boris Johnson have both announced that a deal has been clinched.

Now, it is the Parliament’s turn on Saturday to approve the deal, yet there are mounting concerns that the DUP would reject the deal, given their worries over customs controls and consent.

Hence, the next move for the pound would now hinge the Parliament’s action on Saturday, so it will either climb above $1.30 or drop once again towards $1.25.

British Prime Minister Boris Johnson wants an exit deal to have an orderly Brexit before the October 31 deadline.

However, DUP officials are saying they won’t vote for the plan, and Labour leader Jeremy Corbyn mentioned his party will not back it.

Data released today showed that U.K. retail sales stalled in September, following a 0.3 percent drop in August. Economists had predicted a 0.1 percent fall.

Tomorrow, BOE Governor Mark Carney will speak at the International Monetary Fund in Washington DC, with audience questions expected.

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