Fundamental Comment

Sterling whipsaws from five-month high ahead of Brexit talks

Sterling whipsaws from five month high ahead of Brexit talks

The pound retreated from five-month peak versus the U.S. dollar on Wednesday, amid worries that Brexit deal may fade ahead of another round of Brexit talks.

As of 10:10 GMT, the British pound tumbled against the U.S dollar by 0.30 percent at $1.2749, yet still hovered near its highest level in five-month recorded on Tuesday at $1.2798. Against the euro, the British currency descended 0.28 percent at 1.1550.

Negotiations between Britain and the European Union have reached a critical stage. It was reported yesterday that an agreement between the two sides was imminent, but some reports cited European officials mentioning talks remained “standstill.”

Prime Minister Boris Johnson is meanwhile fighting to bring the DUP into his deal with Brussels, while the DUP expressed reservations on Tuesday night. Theresa May has rejected a similar arrangement as a deal that no British prime minister can accept.

The negotiations, which lasted until 02:30 a.m. and were completed on Wednesday morning. Michel Barnier, the EU's chief negotiator, is scheduled to tell the ambassadors of the 27 member states at 01 p.m. to the outcome of the negotiations between the two parties.

Michel Barnier had told commissioners he was optimistic of getting an agreement sealed on Wednesday. Eyes will focus on an EU Summit on Thursday to get updates about the Brexit.

Regarding economic reports, the U.K. consumer prices did not have significant impact on the sterling’s movements that remained haunted by the political situation.

U.K. CPI inflation stabilized at 1.7 percent in the year to September, below expectations of 1.8 percent.  

The dollar index, which tracks the performance of the U.S. currency against a basket of six currencies, rose 0.07 percent at 98.07, ahead of U.S. retail sales report due at 12:30 GMT.

Share Article