Sterling jumps on reported financial services Brexit deal

Wads of British Pound Sterling banknotes are stacked in piles at the GSA Austria (Money Service Austria) company's headquarters in Vienna July 22, 2013. — Reuters pic
Wads of British Pound Sterling banknotes are stacked in piles at the GSA Austria (Money Service Austria) company’s headquarters in Vienna July 22, 2013. — Reuters pic

LONDON, Nov 1 — The British pound rallied today on reports of a post-Brexit financial services deal, as investors also awaited an interest rate decision from the Bank of England.

Sterling surged to a one-week peak at US$1.2920 (RM5.40) in morning London deals, having risen overnight to retrace ground lost over the last few weeks.

“November kicked off with the focus shifting back onto the pound, with the currency rocketing higher after the latest Brexit update,” said Spreadex analyst Connor Campbell.

“The Times reported that Theresa May has tentatively reached a deal with the EU that would allow UK financial services firms access to post-divorce.”



‘Preliminary deal’

London and Brussels have agreed a preliminary deal that would see UK financial services retain access to European Union markets after Brexit, the paper reported.

British and EU negotiators have struck a tentative agreement on all aspects of a future partnership on services and the exchange of data, The Times said, citing UK government sources.

Such a deal would guarantee British companies access to EU markets as long as domestic regulations remained broadly aligned with those set by Brussels.

However, analysts expressed caution over the latest development, which comes amid stalled trade talks before Britain’s scheduled EU exit in late March 2019.

“This is a real positive as the UK is heading into the final stages of Brexit negotiations this month,” noted analyst Stephen Hubble at global payments group Centtrip.

“However, agreeing a deal and setting out a legal trade agreement are very different things.

“No one will look for ways of making the life easy for the City of London, which is a UK financial-services spot coveted by other EU members.”



kick higher

Europe’s stock markets meanwhile rose strongly, reversing earlier losses as dealers mulled improving US economic optimism on the eve of nonfarm payrolls data.

London stocks won 0.5 per cent ahead of the BoE’s latest call at 1200 GMT, when it is widely expected to maintain its key interest rate at 0.75 per cent.

In the eurozone, Frankfurt equities won 1.0 per cent and Paris gained half a percentage point.

Most Asian stock markets grinded higher today, tracking fresh gains, following a pledge to support the world’s number two economy.

The healthy gains to kick off November come as dealers look to put behind them one of the worst months in recent years, which saw billions wiped from valuations and confidence battered in October.

“October was the worst month in six-years for global equities, and despite a 48-hour reprieve on the final two days of trading as investors balanced portfolios, November begins with regional bourses providing some mixed results,” noted Oanda analyst Dean Popplewell.

Nevertheless, global stock markets rallied Wednesday with no “Halloween horrors” as investors were boosted by runaway US consumer confidence and upbeat corporate earnings, dealers said.



But markets still face myriad problems, including rising US interest rates, the festering -US trade war and gathering fiscal troubles in Italy.

The yuan languished at a 10-year low and approaching 7 to the dollar as uncertainty about China’s economy leads investors to take their cash out.

Key figures around 1130 GMT

Pound/dollar: UP at US$1.2906 from US$1.2766 at 2100 GMT yesterday

Euro/pound: DOWN at 0.8817 pound from 0.8862 pound

Euro/dollar: UP at US$1.1379 from US$1.1312

Dollar/yen: UP at 112.97 yen from 112.94 yen

London — FTSE 100: UP 0.5 per cent at 7,160.03 points



Frankfurt — DAX 30: UP 1.0 per cent at 11,563.18

Paris — CAC 40: UP 0.5 per cent at 5,119.11

EURO STOXX 50: UP 0.9 per cent at 3,225.82

Tokyo — Nikkei 225: DOWN 1.1 per cent at 21,687.65 (close)

Hong Kong — Hang Seng: UP 1.8 per cent at 25,416.00 (close)

Shanghai — Composite: UP 0.1 per cent at 2,606.24 (close)

New York — Dow: UP 1.0 per cent at 25,115.76 (close)

Oil — Crude: DOWN one cent at US$75.46 per barrel

Oil — West Texas Intermediate: DOWN 51 cents at US$64.80 — AFP

Source: The Malay Mail Online





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