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Daily Brexit update: Sterling jumps again as government frays

Daily Brexit update: Sterling jumps again as government frays

Sterling is withstanding the dollar’s revival by safe-haven bid. The greenback returned to favour after the U.S.-China trade dispute took an unforeseen turn overnight. The pound saw a second promising session though after news reports said ministers might be trying to postpone next Tuesday’s parliamentary Brexit vote. Newspapers cite fear of a defeat so seismic that the government could implode. Downing Street insisted in the afternoon that the vote would go ahead. The pound against the dollar was near the day’s highs at last look.

How this affects our Brexit Top 10 markets:

GBP/USD: At around $1.2780, cable was some 85 pips above Thursday’s low. Short covering undoubtedly plays a part. That suggests buyers should be prepared to fade at a moment’s notice.

GBP/JPY: The yen is winning out against sterling regardless, hallmarks of wider ‘risk-off’ conditions.

EUR/USD: Optics are also favourable for the single currency on hopes that the UK’s exit could hit the buffers. EUR/USD was also more than 80 points up from lows. As it approaches the month’s $1.420 high, the same cautions should apply as per sterling.

EUR/GBP: It could be telling that the less volatile single-currency pair is bid on the euro side, again pointing to cable short covering.

UK 100: All international stock markets participate in the global sell-off, but the FTSE even somewhat underperforms in Europe since the start of the week. This is probably due to ties to China and oil. OPEC was still dithering over whether to go ahead with an effective supply cut at last look.

Germany 30: Germany’s benchmark leads Europe to the year’s low, though not quite the two-year low that some major equity gauges have reached.

Lloyds: As we anticipated, the share’s rise a day ago on ‘No Brexit’ hopes has reversed, underlining that optimism is not robust. It traded some 2.8% lower.

Barclays: The biggest UK banks face dwindling net interest income as global market rates tumble. U.S.-tilted Barclays, whose share price loss matches Lloyds’, is also tied to Wall Street gyrations on trade. Like many U.S. shares, improved U.S.-Sino relations could trim some of its deep fall this year.

Shell: The FTSE’s biggest faller with a 4% drop. The first day of OPEC’s two-day meeting has passed without a clear agreement on supply cuts. Shell also said it’s reviewing deals by a former exec accused of bribery.

BP: Shell’s rival slips with the global sector.

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