Looming Brexit deal continue to support sterling

Looming Brexit deal continue to support sterling


On the foreign exchange market, the pound fluctuates with suspense over a possible Brexit deal. After a jump of 1.4% on Tuesday, the British currency gained another 0.5% to $1.2852 on the interbank markets in New York. The Brexit talks were in the final stretch on the eve of a European summit scheduled for Thursday and Friday.

According to European sources quoted Wednesday night by Reuters, a revised draft agreement on the terms of Brexit would be almost ready and waiting for the “global green light” of the British government in London.

Wednesday night, Emmanuel Macron also wanted to be optimistic, evoking an agreement that “is being finalized”. Following a Franco-German Council of Ministers in Toulouse, attended by Angela Merkel, the French president said: “We have also prepared the EU council that will be held tomorrow and Friday, on topics such as budget, enlargement and of course Brexit, on which I want to believe that a deal is being finalized and that we will be able to see tomorrow,” he said at a press conference.

The dollar index fell by 0.34% to 97.96 points, after the publication of a 0.3% drop in retail sales in the United States in September, which increases the chances further rate cuts by the Fed. The euro rose 0.39% to $1.1075.

Oil markets remain volatile. After a decline on Tuesday, prices rose again on Wednesday. On the Nymex, US light crude WTI gained 1.23% to $53.46 (November futures), while Brent rose 1.29% to $59.50.

Gold was up again, up 0.63% to 1,492.90 an ounce, for the December futures contract quoted on the Comex market.

In the bond markets, the yield on the 10-year T-Bond fell Wednesday by 2 basis points to 1.75%. The WEC Fedwatch tool was on its side in the evening with a 90.3% probability of a rate cut by the Federal Reserve at its next meeting on October 29th and 30th. The interest rate of the U.S. central bank would be lowered in the range of 1.50% to 1.75% after two declines of a quarter point already made in July and September.