Despite a UK-EU consensus, GBP movement remained limited with the DUP describing the deal as “driving a coach and horses” through the Good Friday Agreement. The ten DUP MPs are a crucial part of Boris Johnson’s majority, so their refusal to back the current proposal would scupper a parliamentary vote.
Meanwhile, the President of the European Commission, Jean-Claude Juncker ruled out the possibility of an extension, saying: “I gave a brief doorstop with Boris Johnson … If we have a deal, we have a deal, and there is no need for prolongation. That is not only the British view; that is my view too.”
A largely underwhelming investor reaction to the UK-EU breakthrough saw the GBP/USD exchange rate fall flat, with uncertainty once again clouding market sentiment.
If the EU refuses to extend Article 50, MPs are likely to vote in favour of Boris Johnson’s deal in order to avoid a disorderly exit on October 31.
But with the DUP as a significant sticking point, a clear path through parliament means a no-deal outcome could still be on the cards.
In UK economic news, today saw the release of the UK retail sales figure for September, which held steady at 0 per cent.
However, with Brexit developments dominating the spotlight today, economic developments had little effect on GBP exchange rates.
The US dollar, meanwhile, remains subdued following today’s US industrial production figure for September.
This fell below forecasts from 0.8 to -0.4 per cent, dampening market confidence in the US economy.
Meanwhile, improving US-China trade negotiations saw investors fleeing the safe-haven US dollar in favour of riskier assets.
Gao Feng, China’s Ministry of Commerce spokesman, commented:
“China’s market size is huge, and if we can end the trade war and lift all additional tariffs, it will help to deepen trade cooperation in many areas, including agriculture.”
“That fully shows that there is no winner in the trade war, the trade war is neither in line with the interest of China and the US, nor the interest of the whole world.”
Brexit will continue to drive the GBP/USD exchange rate into Friday.
If Boris Johnson’s deal looks increasingly untenable, we could see Sterling sink on rising no-deal fears.
Daily Express :: City and Business Feed