Pound tops $1.23 as no-deal Brexit prospect fades

The British pound topped $1.23 on Thursday, hitting a one-month peak on fading prospects of a “no deal” Brexit after a series of parliamentary votes tore up Prime Minister Boris Johnson’s hardline stance.

Sterling rose to its highest level since July 29, having only on Tuesday plunged to multi-year lows.

Asian stock markets mostly rose, and so did those in Europe except for London as the strong pound hurt multinationals whose earnings are mostly in foreign currencies.

US equity markets were also off to a firmer start.

‘Fresh legs’
UK parliamentarians are rushing through legislation designed to keep Johnson from breaking Britain off from the European Union without a trade deal.

They appeared on course to do so by Monday, only just ahead of a five-week shutdown of parliament Johnson controversially ordered last month.

“News that the bill to stop a no-deal Brexit should complete its passage through the House of Lords by Friday afternoon has put fresh legs on the pound’s rally,” City Index analyst Fiona Cincotta told AFP.

“Whilst there are clearly some hurdles still to be overcome, pound traders are feeling significantly more optimistic about the UK’s eventual exit from the EU,” she added.

The embattled British currency had tanked on Tuesday to $1.1959, its weakest level since 1985 except for a “flash crash” in 2016.

Yet it has since rallied on rising hopes that Britain will not quit the European Union without a trade deal on October 31.

‘Not out of woods’
“The pound has been behaving as a tidy barometer of the odds of a no-deal Brexit,” Rabobank analyst Jane Foley told AFP.

“The pound is clearly not out of the woods with political uncertainty still at very elevated levels — but the risk of a disorderly Brexit next month at least looks set to be pushed off the table,” Foley added.

The bill would force Johnson to seek a three-month Brexit extension until January 31 should no deal emerge from an EU summit in Brussels on October 17-18.

Equities meanwhile were building on the previous day’s advance as investors cheered a number of developments on trade, in Hong Kong and in Europe.

The leader of Hong Kong on Wednesday withdrew a controversial extradition bill that had sparked months of sometimes violent protests in the financial hub.

News that Italy had formed a new moderate, pro-European government also lifted sentiment and early Thursday China announced it would resume trade talks with the United States in Washington next month.

Key figures around 1330 GMT
Pound/dollar: UP at $1.2338 from $1.2253 at 2100 GMT

Euro/pound: DOWN at 89.67 pence from 90.06 pence

Euro/dollar: UP at $1.1066 from $1.1035

Dollar/yen: UP at 106.84 yen from 106.39 yen

London – FTSE 100: DOWN 0.7 percent at 7,257.84 points

Frankfurt – DAX 30: UP 0.8 percent at 12,121.60

Paris – CAC 40: UP 1.1 percent at 5,591.18

EURO STOXX 50: UP 0.9 percent at 3,482.67

New York – Dow: UP 1.0 percent at 26,618.94

Tokyo – Nikkei 225: UP 2.1 percent at 21,085.94 (close)

Hong Kong – Hang Seng: FLAT at 26,515.53 (close)

Shanghai – Composite: UP 1.0 percent at 2,985.86 (close)

Brent North Sea crude: UP 27 cents at $60.98 per barrel

West Texas Intermediate: UP 18 cents at $56.44