Mon, 26th Nov 2018
The pound enjoyed a surge today on the hopes that the government was a step closer to agreeing a Brexit deal. The sterling climbed 1.4 percent to trade at $1.306 against the dollar, and also hit a near seven-month high against the Euro.
The move came after there was a breakthrough in the talks between the UK and the EU, with the respective governments agreeing to the draft text of a deal. The rally could be shortlived, however, as the UK cabinet and Parliament have not yet agreed to the plans. Some analysts fear that the full terms of the deal will not be secured until next year, and that the pound is likely to pull back again before the end of the year.
The pound has seen volatile trading recently, having tumbled at the start of the week as the UK appeared to be in deadlock with the EU. A weak pound is traditionally good for the FTSE 100 because there are so many companies in the index that take their earnings in dollars, although there are other fundamentals that have been dominating the headlines this week, including the price of oil, which has been struggling as production of oil has started to outpace demand once again, in spite of efforts by OPEC to manage the level of supply. Some traders have likened the recent movements in oil to a ‘run on the bank’, as oil fell to a near full-year low.