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Reading: Sterling leaps by nearly 1% to $1.205 as Rishi Sunak unveils post-Brexit deal
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WhatsNew2Day > News > Sterling leaps by nearly 1% to $1.205 as Rishi Sunak unveils post-Brexit deal
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Sterling leaps by nearly 1% to $1.205 as Rishi Sunak unveils post-Brexit deal

Last updated: 2023/02/27 at 2:56 PM
Jacky 3 weeks ago
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Rishi Sunak and Ursula Von Der Leyen signed the agreement today at the Fairmont Hotel in Windsor
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European markets and the pound rose after Rishi Sunak hailed his “decisive breakthrough” on post-Brexit rules and confirmed that trade borders in the Irish Sea were removed.

Sterling rose 0.95% to US$1.205 shortly after the “Windsor Framework” was agreed between the Prime Minister and European Commission President Ursula von der Leyen.

And UK markets were enjoying a revival after the FTSE 100 suffered several days of decline last week.

Global markets took a hit on Friday after new price index figures revealed that US inflation rose unexpectedly last month, raising expectations that the Fed will raise interest rates further to rein in the increase in prices.

But the post-Brexit deal provided some minor relief for investors hoping to end the impasse over the Northern Ireland Protocol.

Rishi Sunak and Ursula Von Der Leyen signed the agreement today at the Fairmont Hotel in Windsor

The FTSE 100 closed 56.45 points higher, or 0.72%, at 7,935.11.

The German Dax jumped 1.13% and the French Cac rose 1.51% at the close.

And across the pond, the US S&P 500 rose about 0.35% and the Dow Jones rose 0.13% when European markets closed.

However, analysts warned that there is still a long way to go before a significant recovery in cross-border trade is achieved.

Susannah Streeter, director of money and markets at Hargreaves Lansdown, said: “Brexit has cast such a long shadow over the UK economy that the lights of opportunity will need to shine brighter before the pound makes a big rally.”

Chris Beauchamp, chief market analyst at online trading platform IG, also warned that optimism could be short-lived.

He said: ‘Friday’s price index surprise certainly spooked investors, but bargain hunters have returned to trading on Monday.

“After the ‘good news is bad news’ theme of recent weeks, the news of the UK-EU deal on Northern Ireland is a welcome development, and one that doesn’t involve the words ‘inflation’ or ‘ interest rates’.

“But the overall outlook still seems to point to high inflation and continued rate hikes, which is unlikely to lead to sustained gains for stocks.”

Sterling was up 0.7 percent at $1.20 and was up 0.3 percent at ¿1.14

Sterling was up 0.7 percent at $1.20 and rose 0.3 percent to 1.14 euros.

When European markets closed, the pound was trading 0.75% higher at around 1.203 against the US dollar and 0.28% higher at 1.135 euros.

In company news, Primark owner Associated British Foods has reported a rise in sales at the budget fashion chain in a fresh indication that shoppers are turning to cheaper items amid the cost crunch.

AB Foods said consumer spending had been more resilient than expected, prompting the group to upgrade its full-year earnings outlook.

AB Foods shares were up 1.4% at the close.

Meanwhile, a spate of corporate insolvencies marked good news for restructuring specialist Begbies Traynor, who revealed that his finances had been boosted by Paperchase’s recent collapse in management.

The firm, which is the biggest player in insolvency handling in the UK, said it had seen an “encouraging level” of insolvency appointments across all market sectors in the three months to February.

Its share price closed up 5.3% after the upbeat trade update.

The biggest gainers on the FTSE 100 were Rolls-Royce, up 8.96 pence to 145 pence, Entain, up 50 pence to 1,356.5 pence, J Sainsbury, up 8.2 pence to 271.2 pence, Melrose Industries, down 4.55p to 151.25p, and Persimmon, down 43p to 1,438p.

The biggest losers in the FTSE 100 were Airtel Africa, down 2p to 121.6p, M&G, down 3.4p to 207.9p, Smith & Nephew, down 11.5p to 1203.5p, Haleon, down 2.95p to 323.75p, Fresnillo, down 5p to 763.8p.

Ms Streeter added: “The dawn may be about to break in a new era of calmer relations between the UK and the European Union, but hopes are not yet faded that it will herald a significant boost to the economy after the Brexit”.

“This new consensual approach should help with other thorny political issues such as migration, but in itself it is unlikely to move the dial much for a big improvement in UK trade right away.

“There are some lingering concerns about the opposition in parliament, which would have to ratify the deal, but the power of the conservative rebels has weakened.”

Walid Koudmani, chief market analyst at XTB, said the EU-UK deal regarding Northern Ireland will end a long period of uncertainty.

But he added that the pound is likely to experience further volatility until the DUP and eurosceptic Tory finally give the go-ahead to any deal.

“Any further hurdles in the process could prove quite counterproductive to investor sentiment and could lead to a retracement from current levels that have already acted as resistance in the past,” he said.

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TAGGED: dailymail, Deal, FTSE, leaps, news, Northern Ireland, postBrexit, Rishi, Rishi Sunak, Sterling, Sunak, Unveils, Ursula von der Leyen
Jacky February 27, 2023
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