Well sterling’s on quite the rollercoaster ride, recovering from Michel Barnier’s ‘disturbing deadlock’ comments thanks to a report in German newspaper Handelsblatt.
Yesterday afternoon’s pound-plunge was sizable enough to send the FTSE to a fresh all-time closing high. Yet by the evening the currency had clawed back its losses, and then some, after Handelsblatt claimed the EU are prepared to offer the UK a 2-year transitional deal, where the latter would meet all of its financial obligations but give up its voting rights.
This isn’t exactly a fresh-take; a transitional period has been batted about since Brexit day dot. And Barnier wasn’t actually that much of a doomsayer on Thursday, stating his belief that ‘decisive progress’ was within reach in the next 2 months. But investors are being selective in what Brexit news they want to listen to, with this Handelsblatt report sending sterling sharply higher.
The currency’s continued to climb this Friday. Cable is up 0.2%, allowing the pound to cross $1.33 for the first time in 11 days; it’ll be interesting to see if the gains against the dollar can last all day given that this afternoon is expected to bring with it a particularly hawkish pair of US inflation and retail sales readings. Against the euro, meanwhile, sterling has risen a further 0.4%, meaning it’s gone from a one month low to an 8 day high in less than 24 hours. This, predictably, has taken the FTSE away from its record peak, the UK index falling 30 points to dip below 7425.
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