Spreadex Market Update

Sterling suffers as Davis insists on Brexit backstop time limit



David Davis dealt a blow to the pound this afternoon, by forcing Theresa May to add a time limit to the Brexit backstop plan.

A cap on how long the fall-back option – designed to avoid creating a hard border in Northern Ireland if a deal isn’t agreed – would be in place has been read as Davis nudging the country further away from a ‘soft’ Brexit, something that has upset sterling. The pound fell 0.2% against the dollar – it was up as much as half a percent higher during the morning session – while against the euro the currency saw its losses double to 0.6%. The FTSE couldn’t make much of this, rising 0.1% to remain trapped between 7700 and 7750.

The strength of the euro appears to be an issue for the previously buoyant Eurozone indices. With the single currency up 0.4% against the dollar and 0.6% against the pound, the DAX and CAC completely lost their way, with the former actually falling 0.3% to head back towards 12800 having ticking 12900 earlier in the day.

The Dow Jones had a better time of it, climbing around 100 points to a fresh, 25250-grazing 3 month peak. This despite the fact there’s a 91.3% chance the Federal Reserve will hike interest rates next Wednesday, according to the CME Group’s FedWatch tool.

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