Sterling surges to 11-week peak on new Brexit plan

Sterling reached an almost three-month high on Friday, after Northern Ireland’s Democratic union party had reportedly decided to back prime minister Theresa May’s Brexit deal.

Sterling surges to 11-week peak on new Brexit plan Source: Bloomberg

Sterling reached an 11-week high on Friday, after UK news reports reveal Northern Ireland’s Democratic Union Party (DUP) would back prime minister Prime Minister Theresa May’s Brexit deal.

UK newspaper, The Sun, reported that the DUP had decided to offer conditional backing for May’s Brexit deal next week.

The pound climbed 1.8% this week, on hopes the UK might avoid a no-deal Brexit on 29 March.

Sterling moved above $1.30 to the dollar.

The pound pushed 0.4% higher to $1.3114, on the back of the news, marking its highest since November.

Looking to EUR/GBP, sterling gained 0.25% against the euro to $0.8631.

Analysts expect sterling to rally to $1.32 versus the dollar and expect monetary policy to remain accommodative in the euro area this year.

Brexit uncertainty pressuring markets

The sterling has been under pressure in recent weeks over Brexit uncertainty, pushing investors towards safe-havens.

Global growth worries have also kept broader risk appetites in check in currency markets over the past month.

Concerns also increased when China reported its weakest growth in three decades, with the International Monetary Fund downgrading its forecasts for the global economy over the next two years.

European Central Bank dovishness

In more recent news, Thursday night’s central bank’s monetary policy meeting had markets worried.

IG market analyst, Kyle Rodda, said markets were worried about European Central Bank (ECB) President Mario Draghi, following the central bank’s monetary policy meeting.

‘Markets were pricing in a very dovish Draghi, but the price action suggests that he may have “out-doved’ market participants expectations.

Draghi emphasized carefully that risks to the European economy have 'moved to the downside', Mr. Rodda said.


IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Please see important Research Disclaimer.

Trading around Brexit

Find out how the UK’s exit from the EU continues to affect traders, and discover:

  • The unique opportunities in a ‘hard’ and ‘soft’ Brexit
  • The markets you should be watching
  • Everything that’s happened so far

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.