Published: Sun, October 20, 2019
Markets | By Otis Pena

Sterling, British Stocks Ride Rollercoaster of Brexit Deal Hopes

Sterling, British Stocks Ride Rollercoaster of Brexit Deal Hopes

Currently, it is being lifted by hopes that a Brexit deal between the United Kingdom and the European Union could improve the odds of the Euro Zone avoiding a recession.

However, the British uit has risen only 0.88% this week against the Euro because the single currency has also shared in the rewards of market jubilation over the mounting prospect of "no deal" Brexit risk being put to bed once and for all - sooner or later.

Sterling fell 0.5% to $1.2762 on the news, drifting from a six-month top of $1.2877 touched on Wednesday. It cut its odds on a no-deal departure to 10% from 15% and kept unchanged its 25% probability of no Brexit.

British Prime Minister Boris Johnson said the "Parliament should get Brexit done on Saturday". The yield rose as high as 1.799% after the Brexit deal was announced on Thursday.

Among individual companies, Bank of America climbed 1.5 percent after reporting better-than-expected results on higher profits in consumer banking and most other divisions.

"Brexit is a coin flip at this point of time going into the weekend, we're still waiting on the trade situation to see if they're going to ink an actual partial deal", said David Meger, director of metals trading at High Ridge Futures.

"Even though we are most optimistic that a deal does happen, we don't think the most likely outcome is that it happens by October 31, so you would be looking at some form of extension and potentially elections", said, Andrew Sheets, chief cross asset strategist at Morgan Stanley.

Sending bearish signals, China's economic growth slowed to 6% year on year in the third quarter, its weakest for 27-1/2 years and below expectations, dogged by soft factory production and continuing trade tensions with the United States.

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British Prime Minister Boris Johnson's career of disdain for the European Union was a thing of the past on Thursday as he and the bloc's leaders celebrated their long-sought Brexit deal.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.24% while the FTSEurofirst 300 index .FTEU3 of leading European shares closed down 0.38%.

SEB didn't provide targets for the Pound-to-Dollar rate Friday but the projection of a near-five cent increase in the Pound-to-Euro rate occurring, concurrent with an also-unspecified increase in the Euro-to-Dollar rate, implies substantial gains for the Sterling relative to the greenback. They had surged Friday, fuelled by a blast on an Iranian tanker and news of the US-China deal.

"Any positions predicated on an imminent no-deal crash-out look hard to countenance at this stage", said Rumpeltin, the European head of currency strategy at TD.

The euro rested at US$1.1125, not far from US$1.1140, its highest since August 26.

Benchmark Brent crude oil futures fell 49 cents to settle at $59.42 a barrel.

With an end to the Brexit saga appearing to be in sight, U.S. stocks were little changed and European markets sold off. The contracts were on track for weekly declines of about 1% and 0.7% respectively.

Spot gold was down 0.2% at $1,489.02 an ounce at 1143 GMT. The unexpected drop in retail sales was partly due to a marked drop in sales by vehicle dealers and parts dealers, which fell 0.9 per cent in September after rising 1.9 per cent in August.

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