The pound rallied on Thursday after a Brexit agreement had been reached between the UK and the EU. Sterling initially reacted positively to the news as it reached five month-highs against the US dollar. Shortly after, Sterling dipped as concerns grew over Johnson’s ability to secure enough votes to pass the deal through Parliament.
Boris Johnson stated that the new deal was ‘great’ and takes ‘back control’. Jean Claude Junker was also vocal and said the deal was ‘a fair and balanced agreement’ for the EU and the UK.
The Brexit deal will still need the approval of both the UK and European Parliaments, but the opposition from the DUP has cast doubts on its sign-off. The DUP is heavily relied on if the deal was to pass Parliament and stated that the new deal is not in the best interest of Northern Ireland. A statement from the DUP said that “these proposals are not, in our view, beneficial to the economic well-being of Northern Ireland and they undermine the integrity of the Union.” Attention now turns to Saturday when the deal will be put to a vote in UK Parliament.
Germany have lowered their growth forecast for 2020 as slowdown continues to trouble the German economy. Angela Merkel has cut Germany’s growth forecast to 1% from a previous 1.5% as slow global demand, Brexit and trade disputes continue to impact the German economy.
Furthermore, Germany’s manufacturing sector as been hit the hardest with trade disputes knocking down demand for exports along with slow growth within the eurozone. However, forecasts can be reversed if there is an orderly Brexit and whether trade tensions can be solved according to the German government.
All day: EU summit.
18:30 – GBP: BOE governor Mark Carney speaks.