Brexit deal chatter lifts the Pound

Summary:

• Reports of a full withdrawal agreement published by Tuesday

• Could lead to EU Brexit summit before month end

• GBP moves higher on the news

There’s been a bit of a move higher in the Pound in the last hour on another upbeat story regarding Brexit. A political correspondent for the Times has published one draft Brexit divorce agreement timeline that’s been circulating in London. The document includes a cabinet meeting on Monday, Raab meeting Barnier on Tuesday along with the publication of the full withdrawal agreement before PM May would make a statement before parliament on Wednesday. The report also says that this would lead to an EU Brexit summit likely being held later this month between the 23-25th of November.

The pound has enjoyed steady gains against most of its peers in the past week on a more positive news flow regarding Brexit. The currency has appreciated by more than 1% against the JPY, CAD and CHF. Source: xStation

Whether there’s any substance to this report remains to be seen but a recurring theme in the past week or so has been a positive news flow regarding Brexit from the UK. While the Irish backstop border seems to remain a major stumbling block and with little by the way of concession on this matter in sight, there’s been upbeat noises coming from May and Raab on the latest developments. The EU seem to be less hopeful and more pragmatic at present, with Irish ministers in particular outspoken on the fact that no progress has been made on the backstop.

The largest gains of late for the pound have come against the Japanese Yen with the pair benefitting not just from the gains in sterling but also from a fall back in the Yen as risk appetite has improved. Price has rallied strongly and gained almost 700 pips in less than 2 weeks and the market is now probing prior resistance around 149.70. This has proved a hurdle too far for longs on the past couple of occasions it was tested back in July and last month and it will be interesting to see how price reacts. A failure to cleanly get above 149.70 would keep the broader range of the past 6 months in tact but if the longs can extend this rally then further gains up towards 153.80 are possible - especially if there is some tangible progress on Brexit in the coming days.   

GBPJPY is probing prior resistance around 149.70 after strong recent gains. Can the market break out above this potentially pivotal level? Source: xStation