Sterling nears five-month high amid speculation


There was optimism Boris Johnson would win parliamentary backing for his Brexit deal
Newsfeed22 Oct 2019
Photo credit: AFP Photo


Market news selected by the DBS Chief Investment Office


Sterling traded near a five-month high amid speculation UK Prime Minister Boris Johnson will eventually be able to win parliamentary backing for his Brexit deal.

The pound clung to the USD1.30 mark, even as House of Commons Speaker John Bercow rejected the government’s attempt to bring back the divorce agreement for debate.

A vote on the deal failed at the weekend (ended 20 October) and that pressured sterling at the market open. But the British currency has since recovered, with strategists arguing that any dip would prove short-lived, and approval for the deal may ultimately be possible. UK government bonds slid and stocks advanced.

With the parliamentary vote likely to be decided by fine margins, sterling failed to build on gains after breaching the USD1.30 mark. The UK prime minister needs to garner support of 61 Members of Parliament to back his deal – he likely has 62, according to a Bloomberg analysis.

The pound rose as much as 0.2% to USD1.3013 after a four-day run of gains last week (ended 18 October). Gilts fell, with the 10-year yield climbing 4 bps to 0.75%, while the domestically focused FTSE 250 index of stocks extended two weeks of gains.

Some analysts remained cautious, given a set of potential amendments on a second referendum and a customs union is being considered. – Bloomberg News.

The pound closed 0.18% lower to USD1.2960 on Monday.

The US Dollar Index (DXY) rose 0.05% to 97.328, the euro lost 0.15% to USD1.1150, and the Japanese yen weakened 0.16% to 108.62 per dollar.


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