Daily Brexit update: Volatility and uncertainty
“Uncertainty is the only certainty”, wrote University of Philadelphia Professor John Allen Paulos, who probably didn’t know he was coining a phrase for our times, let alone Brexit. But the statement is one of the few points that sustains from one week to the next. Currently, perhaps we could even adapt it to “…is volatility”, with sterling, increasingly erratic, though ironically still fairly rangebound, as hopes of a breakthrough surface and then sink, rinse and repeat, seemingly ad infinitum. The pound against the dollar was down 12 pips at $1.3036 by late afternoon, having been 0.3% higher a few hours before. The updraft was in response to the Chancellor of the Exchequer Philip Hammond’s optimistic comment that a reformulated deal could be ready for Parliament to vote on as early as next week, perhaps on 27th February, the date on which Prime Minister Theresa May has promised MPs (another) meaningful vote. The UK’s top economic official was somewhat contradicting Downing Street though. With an ostensibly non-Brexit related EU Summit taking place in the Middle East right now, No. 10 has been keen to downplay the possibility of a breakthrough there. Still, Hammond characterised talks with top EU officials as “constructive," noting that some guarantees were being discussed to make clear the Irish border backstop could only be a "temporary arrangement". Reports that a government source poured more cold water on the possibility of a deal were enough to end sterling’s downdraft eventually. The rate is now on its way back to recently re-established $1.3009 support.
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