Daily Brexit update Sterling gets a lift from No Brexit hopes

An outbreak of bullish sentiment in the UK is mostly limited to Sterling, as worrying signals from the U.S. Treasury keeps global Shares under pressure. British Shares, at least the top tier of the market, are orientated more to hints of recession from U.S. market yields as well. At the same time, the pace at which Sterling regains tone is also keeping blue-chip buyers away. The market is now downplaying dark implications from a potential constitutional crisis. Instead, focus is increasingly on the possibility that an historic government contempt ruling, and a dizzying host of further developments could prevent Brexit happening at all.

How this affects our Brexit Top 10 markets:

GBP/USD: Cable was the main beneficiary for much of the day before a fade set in. Much scepticism remains about the chances that Brexit might not happen, or indeed, if it does happen, that the UK can stage a smooth exit.

GBP/JPY: Sterling’s most volatile major pair maintained a 0.6% rise at last check, though was well below the day’s best.

EUR/USD: The euro struggled despite darkening clouds for the dollar. Eurozone rates paint almost as worrying a cloud for the region’s economy as Treasury yields do for the U.S.

EUR/GBP: Sterling’s bounce was evident sending pair to an 88.72p two-day low. The euro eventually rallied as the spike in optimism about Brexit faded.

UK 100: The FTSE is the closest proxy to the U..S. dollar among UK indices, hence it struggled on Wednesday. Sterling staging its biggest jump since late November also weighed on blue-chip stocks.

Germany 30: The DAX reflects a more balanced mixture of global sentiment and Brexit-related mood. It will remain close to the year’s lows unless a more promising read of the global outlook emerges.

Lloyds: Britain’s biggest domestically focused bank has a lot riding on Brexit. At the same time market rates have plunged to six-month lows as the economy slows. Lloyds rose 2% today but with investors having second thoughts late in the session, the stock could well lose that advance later in the week.

Barclays: More internationally focused Barclays also rose, but less, given less exposure to Brexit and more to U.S. yields.

Shell: The heaviest weight in the FTSE kept the British market in the red ahead of Thursday’s OPEC meeting, the outcome of which remains uncertain.

BP: BP has somewhat further to fall than Shell as it remains moderately higher in 2018. That makes it more prone to selling when geopolitical or oil market pressures rise.

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.