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  • You might imagine that there's a huge sigh of relief spreading

  • around sterling traders but you would not be quite right.

  • The currency has rocketed over the past week.

  • Ever since UK Prime Minister Boris Johnson

  • held what appeared to have been constructive talks

  • with his Irish counterpart Leo Varadkar, in Merseyside,

  • traders and investors have been able to see in the distance

  • the vague outline of what appears to be a deal on Brexit

  • between the UK and EU.

  • Suddenly, those predictions that the pound could drop to $1.10

  • or even lower are being ripped up.

  • Instead, it's shot up from around $1.22 to $1.28.

  • This is the market's way of saying

  • it thinks the no-deal Brexit bombshell has

  • been safely defused.

  • Banks are starting to send out advice

  • to their investor clients about what happens next.

  • What is the trade if - bear with me here

  • - everything goes right?

  • It's not just to buy sterling.

  • Homebuilder stocks, bank stocks, and investments

  • with a purely domestic UK focus are all

  • thought to be in line for a boost.

  • And indeed, they've already rallied.

  • UK government bonds, a bolt hole for those worried about Brexit,

  • also stand to fall.

  • So what's not to like?

  • Well, Brexit has turned snatching defeat

  • from the jaws of success into an art form.

  • There is so much that can still go wrong.

  • We're still beset by headlines suggesting a deal is on,

  • and then it's still far too early to say.

  • The shorts, the negative bets, have peeled away from sterling,

  • but few are brave enough to dive in and buy for the long term

  • just yet.

  • UK markets still have a long way to climb

  • if a deal goes through.

  • The end to this drama feels close, but we're not there yet.

You might imagine that there's a huge sigh of relief spreading

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B1 FinancialTimes brexit sterling deal pound minister boris

How Brexit hopes and fears are moving the pound | FT

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    林宜悉 posted on 2020/03/07
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