Compromised compromise caps sterling relief

Last night's razor thin breakthrough just changes the flavour of uncertainty

Notwithstanding relief from last night’s 1-vote parliamentary majority against ‘no deal’, the brittle breakthrough just changes the flavour of uncertainty. Sterling peaked around 30 pips higher after late-night news before returning to it mid-$1.3150s comfort zone.

Hard-Brexit risk has fallen incrementally, but there’s still no alternative. Labour leader Jeremy Corbyn and Prime Minister Theresa May dubbed first-round talks “constructive” but also inconclusive. Whispered assessments were more negative. Labour negotiators complained compromise didn’t extend to red lines. Some suspect talks are a device for scaring Conservative rebels into backing the Brexit deal, or for passing the buck.

Meanwhile, discord and disapproval reign. Pro-Brexit Tories are scathing. A junior minister and a whips office official resigned. The EU seeks a longer Article 50 delay than the PM amid speculation she’ll settle for 9 months. Chancellor Philip Hammond indicated Britain wants to exit any lengthened pause as soon as a parliament agrees a deal.

Sterling’s resumed challenges are clearer vs. euro. Despite more slumping German data, the single currency remained bid for most of Europe’s session. It advanced off 0.8518 lows to 0.8548 before sterling revived. The bottom line of a falling flag suggests sterling leeway down to 85.20p, or 85.13, a consistent resistance since late March. Further euro support is possible at 0.8448. The gently falling 100-hour average implies continued euro pressure. But until ranges collapse, sterling rallies will be sold towards around 85.60p.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.