Summary:
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GBP falling lower once more
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No tangible developments on the Brexit front
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FTSE rises close to 2-month high
The pound continues to drift lower with the GBP/USD rate dropping to its lowest level in a fortnight amidst a heavy backdrop of Brexit related news. Developments on this front have been the single largest driver of sterling since the referendum back in 2016 and politics remains very much at the forefront of the mind as far as investors are concerned. With MPs returning to Westminster there has been the expected barrage of cross-party criticism and petty squabbling but the big picture remains unchanged.
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The pound is sliding lower against all its peers and is on track for a second consecutive day of declines. Source: xStation
Two conflicting messages, first from an EU diplomat and then from a junior Brexit minister, have caused some short-term volatility after the former stated that negotiations had effectively reached a dead-end before the latter claimed there are now discussions about re-opening the withdrawal agreement. As is the case with the vast majority of Brexit-related news that crosses the wires these amount to little more than background noise as far as the markets are concerned. The key themes to watch remain any tangible progress on the backstop, developments around requesting an extension to the 31st October deadline and also the timing of what seems to be an inevitable general election.
FTSE 100 near 2-month high
One beneficiary of the pullback in the pound is the FTSE 100(UK100 on xStation) with the benchmark pushing to the upside and trading close to levels not seen since the start of August. The region from 7375-7400 has provided some technical resistance and capped any advances in the past 8 weeks and how the market now reacts around this level could prove pivotal going forward. The breadth of the gains are also worth mentioning with only 10 stocks failing to join in the broader rally at the time of writing.
The leading UK stock benchmark has gained in the past couple of sessions as the pound has fallen with price once more probing the resistance zone around 7375-7400 that also coincides with the 50% Fib retracement of the large declines seen over the summer. Source: xStation
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