Pound surge halted amid Brexit deal concerns
The upward momentum of the pound, triggered by Thursday’s news of a Brexit agreement between the UK and EU, has halted amid growing concerns that the DUP could prevent the deal from gaining parliamentary approval.
Following the news of a deal between the UK and the bloc earlier on Thursday, pound sterling hit a five-month high against the dollar of $1.30.
Since the DUP announced that it would not back the deal in Parliament, sterling has since begun to lose ground.
As of the early afternoon, the currency fell below $1.28.
There was a similar trajectory when measured against the euro, with sterling going above €1.16 following news of the deal, before withdrawing to €1.1525.
It follows previous trends of the value of sterling increasing whenever signs have emerged that a deal is feasible.
The stock market also enjoyed a boost following news of the agreement, with the FTSE 100 index remaining 0.7 per cent higher by the early afternoon when the pound had backtracked.
Adam Marshall, based at the British Chambers of Commerce, suggested that businesses will “reserve judgement” on the deal “until they see the detail” and can analyse how it will impact them in more depth.
Marshall said: “Let’s not forget, we’ve been here before. There is still a long way to go before businesses can confidently plan for the future.
“For business, this deal may be the end of the beginning, but it is far from the beginning of the end of the Brexit process”.
From the EU summit in Brussels, prime minister Boris Johnson tweeted: “We’ve got a great new deal that takes back control”.
These sentiments were echoed by European Commission president Jean-Claude Juncker, who said that the deal was “fair and balanced” and a testament to the UK and EU’s joint “commitment to find solutions”.
Juncker went on to “recommend that [the EU summit] endorses this deal”.
Leading UK economist at Capital Economics, Paul Dales, believes the deal provides “scope for economic growth, interest rates, gilt yields and the pound to all rise further than is widely expected”.
The new agreement is nonetheless subject to approval from both the UK and European parliaments, with doubt still lingering among experts over whether it can pass in the House of Commons with the ongoing opposition of the DUP.
In a statement, the DUP said that the proposals put forward in the new deal “are not, in our view, beneficial to the economic well-being of Northern Ireland and they undermine the integrity of the Union”