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Sterling shrugs off GDP hit as Brexit and dollar weakness dominate

October 9, 2020

By Elizabeth Howcroft

LONDON, Oct 9 (Reuters) – The pound was steady against the U.S. dollar on Friday, brushing off worse than expected UK growth data as investors became more optimistic about a Brexit deal being reached ahead of a key European Council summit next week.

The pound has been volatile this week on contradictory headlines about how much progress has been made in Brexit negotiations. Both sides have said a deal is still possible.

“The last two weeks have seen some brutal whipsawed price action in sterling,” said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets,

“There is going to be that ongoing susceptibility to Brexit headlines but the mood music still seems to be reasonably positive,” he said, adding sterling could test the key $1.30 level again if the risk environment remained constructive.

At 1034 GMT, the pound was at $1.2937, little changed on

Take Five: Banks, Bottom Lines, Brexit | Investing News

October 9, 2020

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(Reuters) – 1/BANKING ON RECOVERY

After U.S. Q2 results beat expectations, Q3 will show whether dire forecasts for companies’ bottom lines were justified.

Most sectors will again show steep drops in earnings but it should be less dramatic than the previous quarter; expectations are for an average 21% decline, versus the 31% contraction of Q2, when coronavirus-linked lockdowns decimated economic activity.

Energy companies are seen faring worst, with earnings down 115% from a year ago, according to Refinitiv. Tech earnings are predicted to fall just 0.5% percent.

Banks — Citi and JPMorgan report on Tuesday — may see earnings slip 19% on average but there is hope that after two quarters of hefty provisioning against bad loans, potential loan losses have mostly been covered.

(Graphic: Wall Street braces for lower earnings – https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqnrdxpx/Pasted%20image%201602175244692.png)

Will the Fed do something about the Treasury yield curve?

Bets on a spending boost from any

U.K. Urges Finance Execs to Prep For Market Volatility on Brexit

October 9, 2020

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(Bloomberg) — The U.K.’s two financial regulators urged the industry to finish final preparations for a potentially messy no-deal Brexit.

© Bloomberg
A London bus crosses Waterloo bridge against a backdrop of skyscrapers including 22 Bishopsgate office tower, the Leadenhall building, also known as the “Cheesegrater”, The Scalpel, and 20 Fenchurch Street, also known as the “Walkie-Talkie” in the City of London, U.K., on Wednesday, Jan. 29, 2020. The European Union will consider about 40 equivalence decisions this year, determining how much equity, fixed-income and other investment banking business can remain in London and still serve EU clients.

With negotiations between the U.K. and European Union still facing roadblocks, the Bank of England and Financial Conduct Authority urged finance executives to take further steps to make sure U.K. firms can continue trading stocks and derivatives easily with EU clients.

“Market volatility and disruption to financial services, particularly to EU-based clients,

Sterling edges up against dollar but falls versus euro; Brexit talks in focus

October 9, 2020

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Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

LONDON, Oct 9 (Reuters) – Sterling edged up against the dollar but fell against the euro after worse-than-expected UK GDP data, while investors focused on Brexit negotiations where the “mood music” was seen to have improved.

Britain’s GDP rose 2.1% in August – the slowest increase since the economy began to recover in May from its record slump. Much of what growth occurred was down to the government’s one-off restaurant subsidy scheme.

The data had limited impact on the pound, which was in its third consecutive day of gains against the dollar and only slightly down versus the euro.

Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets, said that the GDP data, which calls into question the idea of a V-shaped recovery, had little effect on the market since it was already

British midcaps hit near 2-month high on upbeat Brexit views

October 8, 2020

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By Shashank Nayar

Oct 8 (Reuters) – British midcaps rose to their highest levels in nearly two months on Thursday following the Bank of England Governor’s upbeat views on Brexit and as a slew of corporate results showed signs of an improvement.

Bank of England Governor Andrew Bailey said he believed Britain and the European Union should be able to reach a trade deal, and that he did not expect the new wave of COVID-19 cases to be as damaging as the first.

Capping the market’s gains, however, Prime Minister Boris Johnson’s government said it is considering additional local COVID-19 restrictions for parts of northern England as the second wave of the novel coronavirus accelerates.

The mid-cap index .FTMC, considered a barometer for Brexit sentiment, gained 0.5%. Electrocomponent ECM.L was one of the biggest boosts after it said it expects the virus’ impact to ease in the second

Graphic: Options signal relief for pound as Brexit deal heaves into view

October 7, 2020

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By Saikat Chatterjee, Elizabeth Howcroft

LONDON (Reuters) – Currency traders are seeing increased demand for derivatives that enable holders to position for a stronger pound, as improved chances of a Brexit trade deal start to push the risk of negative interest rates off the table.

FILE PHOTO: A British pound note is seen in front of a stock graph in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration

Sterling is 4% off 2020 highs of $1.35 hit last month when Britain appeared set to exit European Union trading arrangements with no alternatives in place, a catastrophe that could force the Bank of England to cut rates below 0%.

But recent positive news around Brexit talks have flipped markets into bullish mode, lifting sterling back toward $1.30.

“A month ago I would’ve said (UK Prime Minister) Boris Johnson has offended the Europeans to a point where they don’t want to negotiate

Options Signal Relief for Pound as Brexit Deal Heaves Into View | Investing News

October 6, 2020

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By Saikat Chatterjee and Elizabeth Howcroft

LONDON (Reuters) – Currency traders are seeing increased demand for derivatives that enable holders to position for a stronger pound, as improved chances of a Brexit trade deal start to push the risk of negative interest rates off the table.

Sterling is 4% off 2020 highs of $1.35 hit last month when Britain appeared set to exit European Union trading arrangements with no alternatives in place, a catastrophe that could force the Bank of England to cut rates below 0%.

But recent positive news around Brexit talks have flipped markets into bullish mode, lifting sterling back toward $1.30.

“A month ago I would’ve said (UK Prime Minister) Boris Johnson has offended the Europeans to a point where they don’t want to negotiate with him,” said Mark Holman, CEO at TwentyFour Asset Management, adding that talks seemed to be getting “warmer and warmer”.

Goldman Sachs

Sterling weaker vs euro, focus remains on Brexit

October 5, 2020

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LONDON (Reuters) – Sterling fell against the euro on Monday, although losses were limited as most analysts said they expect Britain and the European Union to soon conclude a Brexit deal.

FILE PHOTO: Queen Elizabeth II is seen with printed medical masks on the Pound banknotes in this illustration taken, March 31, 2020. REUTERS/Dado Ruvic/Illustration

Versus the broadly weaker U.S. dollar, the pound rose.

British Prime Minister Boris Johnson and the head of the EU’s executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up Brexit talks to close “significant gaps” barring a new trade partnership.

Both sides said they have made some progress but not achieved yielded a breakthrough.

The EU must show “more realism” if it wants to bridge differences with Britain on fisheries, a spokesman for Johnson said on Monday.

Johnson does not want the Brexit transition to end without a new

UK’s Johnson Doesn’t Want a No-Deal Brexit but Can Live With It | World News

October 4, 2020

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LONDON (Reuters) – British Prime Minister Boris Johnson does not particularly wish for the Brexit transition period to end without a new trade deal in place but believes that Britain could live with such an outcome, he said on Sunday.

With the Dec. 31 expiry of the transition period fast approaching, Johnson and the head of the EU’s executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up negotiations on a post-Brexit deal.

“I think it’s there to be done,” Johnson said during an interview on BBC television.

“Alas, there are some difficult issues that need to be fixed, and there’s no question that the EU needs to understand that we’re utterly serious about needing to control our own laws and our own regulations, and similarly they need to understand that the repatriation of the UK’s fisheries … is very important.”

Asked whether he was

UK’s Johnson doesn’t want a no-deal Brexit but can live with it

October 4, 2020

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LONDON (Reuters) – British Prime Minister Boris Johnson does not particularly wish for the Brexit transition period to end without a new trade deal in place but believes that Britain could live with such an outcome, he said on Sunday.

With the Dec. 31 expiry of the transition period fast approaching, Johnson and the head of the EU’s executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up negotiations on a post-Brexit deal.

“I think it’s there to be done,” Johnson said during an interview on BBC television.

“Alas, there are some difficult issues that need to be fixed, and there’s no question that the EU needs to understand that we’re utterly serious about needing to control our own laws and our own regulations, and similarly they need to understand that the repatriation of the UK’s fisheries … is very important.”

Asked whether he was