Confidence that a no deal Brexit will be avoided boosts markets
Fiona Cincotta October 21, 2019 10:17 AM
On Saturday MPs voted to withhold approval for the Prime Minister’s Brexit deal forcing him to write to Brussels to ask for an extension of the October 31 deadline. Brussels was probably left speechless given that this letter was followed up by two more in which the PM told the EU he is actually against the delay.
Brussels’ confusion aside, the main Brexit stage will be back in Parliament today as Boris Johnson asks MPs to vote on his deal. As Theresa May put it in a debate: “I have a distinct sense of déjà vu here.”
Investors seem increasingly confident that despite the outcome of today’s vote a messy Brexit will be avoided. The new optimism has spilled both into the currency market and the debt market with the pound initially slipping after London markets opened but gradually firming to break above $1.30, a level last seen in May. UK government bond yields have also bounced to reflect the new level of investors’ confidence.
Banking shares rally as pound bounces
The FTSE is trading nearly flat, weighed down by a 10% decline in Prudential which has proceeded with its plans to demerge its M&G business. As the pound dipped and then firmed, banking shares attracted the most volume, with the Royal Bank of Scotland and Lloyds comfortably in the lead. In contrast, oil firms are under pressure, reacting to a slight dip in oil prices and more concerns about the Chinese economy.
Disclaimer: The information on this web site 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. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.