Commenting on Sterling’s reaction to reports of UK/EU negotiators closing in on a Brexit deal, Andy Scott, Associate Director at JCRA, said: “It’s always interesting to see how a deadline – such as the one set by Michel Barnier this morning for a deal tonight – can cause a significant jump in Sterling volatility.
“There is much anticipation in the market for a deal to be announced and there could still be further gains for Sterling if one is agreed.
“However, we always try to look beyond short-term “noise” and consider the bigger picture. With regards to Brexit, one of the questions is if they’ve scrambled a deal together this quickly, how much of the detail has been left to the next stage that will be subject to increased scrutiny (and no doubt objections) from both sides? Equally, assuming Boris Johnson gets his general election wish, how would a hung parliament impact Brexit, especially if instead of a deal there has been another extension.
“We continue to exercise great caution over any Brexit deal headlines as we’ve seen all too many times how a last-minute deal can be scuppered at the last minute!”