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A BUM DEAL BORIS

 Brexit deal: Pound on a rollercoaster as DUP vows to vote against Johnson – live updates

DEAL!

  • Pound surges to stand above $1.29 for first time since May after UK and EU declare that a Brexit deal has been reached…
  • …but falls back again as DUP confirms it will vote against proposals, casting doubt over whether Boris Johnson can get past Parliament
  • UK stocks advance amid measured relief rally
  • Follow the latest Brexit updates on our politics live blog

WHAT DOES IT ALL MEAN?

IN THE CITY… 

Northern Irish business leaders offer cautious backing to deal

Northern ireland

Motorists pass along the old Belfast to Dublin road close to the Irish border in Newry, Northern Ireland CREDIT: PETER MORRISON/AP

Northern Irish business leaders have issued cautious support for Boris Johnson’s Brexit deal, my colleague James Rothwell reports.

Stephen Kelly, the head of Manufacturing NI, which represents more than 100 firms in the region, said:

We give a guarded welcome to the agreement between the UK and the EU. 

It removes the risk of a catastrophic no deal and set a new floor below which NI could not fall providing a solid foundation from which to press up from should the UK and EU not speedily conclude a new relationship.

It is now critically important that Parliament approves a deal and that work is escalated to secure a new positive long term free trade relationship between the UK and the EU.

 

2:22pm

Can a Brexit deal turn around a slowdown in the housing market?

Houses

Homeowners have shied away from selling their homes due to Brexit uncertainty

That’s the question Telegraph Money’s Adam Williams has set out to answer. He writes:

In the three years since the vote there has been a reduction in the number homes being put up for sale, ever-growing transaction times and a decline in annual house price growth as negotiations between Britain and the European Union have dragged on.

However, with the relative certainty presented by a deal, analysts believe that buyers and sellers will soon return to the market.

Read more here: Why the Brexit deal will reverse Britain’s property market slump

1:59pm

Experts: UK markets to snap back if deal passes

Brexit

Has a no-deal outcome been avoided? CREDIT: MATT DUNHAM/AP

Here’s some reaction to the current Brexit situation from analysts.

Luca Paolini, chief strategist at Pictet Asset Management, says:

Brexit has left UK equities as the cheapest of all the global stock markets, while sterling is also undervalued. With plenty of bad news priced in, any resolution to the country’s political turmoil is likely to see a big snap-back. We figure there’s the prospect of a 20 per cent upside to the market.

Deutsche Bank’s Oliver Harvey says:

There will be much focus on upcoming votes in Parliament on Saturday, and whether Mr Johnson’s deal receives ratification (discussed in more detail below). But the important point from the market’s perspective is that avenues to a no deal Brexit have been largely closed off. The only prospect of a no deal Brexit in the next three to six months would arise if a general election resulted in the Brexit Party performing sufficiently strongly to be needed to support a Conservative minority government.

Dean Turner of UBS adds:

As has typically been the case with Brexit newsflow in the past, moves within the UK equity market are likely to remain more significant than moves to the overall UK equity market. On sterling, we retain our overweight position versus the US dollar in our FX strategy. If a deal is at last reached, we may even see GBPUSD rally to 1.35. If MPs do not agree on a deal after all and we are faced instead with an extension, followed by a General Election, we would more likely see GBPUSD settle between 1.26 and 1.32. The looming no-deal Brexit scenario, which could have flung GBPUSD as low as 1.12, now appears the least likely outcome.

 

1:43pm

Credit crunch looms

Bank of England

Loans could be harder to come by as lenders told the Bank of England they are set to cut back the availability of credit to businesses CREDIT: DOMINIC LIPINSKI/PA

Bad news for businesses: Firms face the biggest crunch in lending since the financial crisis as banks prepare to slash risk-taking and rein in credit in the coming months. My colleague Tim Wallace reports:

The availability of finance has held steady for the past four years after a recovery from the credit crunch and eurozone crisis.

But companies could suddenly find their easy access to debt drying up, according to the Bank of England’s quarterly credit conditions survey.

The proportion of banks expecting to cut access to credit over the rest of this year now outweighs those anticipating easier access to loans by a margin of 13.5pc, indicating the final three months of the year will see the sharpest tightening in financial conditions since 2008.

Bar chart with 47 bars.
Businesses face a serious squeeze on bank lending
The chart has 1 X axis displaying categories. Range: 47 categories.
The chart has 1 Y axis displaying % of banks expecting to increase credit availability, net balance. Range: -50 to 50.

Chart graphic.
 
% of banks expecting to increasecredit availability, net balanceA credit crunch loomsBusinesses face a serious squeeze on bank lendingNext three monthsQ1 2008Q3 2008Q1 2009Q3 2009Q1 2010Q3 2010Q1 2011Q3 2011Q1 2012Q3 2012Q1 2013Q3 2013Q1 2014Q3 2014Q1 2015Q3 2015Q1 2016Q3 2016Q1 2017Q3 2017Q1 2018Q3 2018Q1 2019Q3 20190-50-252550SOURCE: BANK OF ENGLAND
 

End of interactive chart

1:28pm

Pound falls as DUP confirms opposition to deal

It’s on – but may already be clearly off. The DUP have confirmed they will vote against the Brexit deal on Saturday, rather than simply abstaining. That makes it incredibly difficult for Boris Johnson to win a vote at this time.

Laura Hughes

@Laura_K_Hughes

 

DUP officials confirm there is NO chance of them abstaining on the vote. They are voting it down.

664 people are talking about this

 

 

Laura Kuenssberg

@bbclaurak

 

Govt confirms plan for straight deal or no deal vote on Saturday – but almost bound to be orher amendments put down by MPs too

205 people are talking about this

 

 

That’s sent sterling down on the day – what a rollercoaster!

Day

03:0006:0009:0012:001,2801,2851,290Previous close: 1.2819

1 week
5.00%

1 mth
3.15%

3 mths
3.30%

YTD
0.52%

1 year
-2.75%

Last
1.2819

Change

+ /  %
-%

Time
14:50:09

jeroen blokland

@jsblokland

 

This is European style politics. It’s NEVER really over! sinks from a high of almost 1.30 against the .

View image on Twitter

30 people are talking about this

 

 

Garry White@GarryWhite

 

“act in haste, repent at leisure” https://twitter.com/markets/status/1184805081591488515 

Bloomberg Markets

@markets

 

Pound erases gains https://bloom.bg/2IZ0MdS

View image on Twitter

See Garry White’s other Tweets

 

 

12:54pm

European gains looking muted

Things are still a fairly healthy green across Europe stock markets, but the gains we saw earlier have not hung around. 

Bloomberg TV

CREDIT: BLOOMBERG TV

12:45pm

Wall Street set to rise at open

With just under two hours until trading opens on the US markets, Wall Street is currently set for moderate gains based on futures trading.

Though Brexit hopes are spilling over the Atlantic, there are plenty of other things that may be on traders’ minds – for instance, this letter from Donald Trump to Turkish President Erdogan, leaked overnight:

Trish Regan

@trish_regan

 

EXCLUSIVE: I have obtained a copy of ⁦@realDonaldTrump⁩’s letter to . ⁦@POTUS⁩ warns him to not “be a tough guy! Don’t be a fool!” Says he could destroy Turkey’s economy if is not resolved in a humane way. Details tonight at 8pm

View image on Twitter

21.2K people are talking about this

 

 

12:18pm

Brexit: Five things to read right now

Michel Barnier

European Union chief Brexit negotiator Michel Barnier CREDIT:  FRANK AUGSTEIN/ AP

It’s Brexitshambles out there, with the pound now back to almost flat on the day, the FTSE 100 and 250 both looking a bit more neutral at around 0.5pc up, and DUP sources confirming they will not back Boris Johnson’s deal on Saturday.

Cutting through the noise, here are five things you should read to understand what is going on, and where the UK goes from here:

  1. Can Boris Johnson get his deal through Parliament without the support of the DUP?
  2. The DUP says it cannot support Boris Johnson’s deal on customs and consent – what does it mean? 
  3. Russell Lynch: This deal doesn’t get Brexit done – it’s just the end of the beginning
  4. Allister Heath: This may be Leavers’ last, realistic chance to achieve a proper Brexit
  5. Money: What does the Brexit deal mean for your personal finances?

 

12:09pm

FSB: Focus needs to move to future relationship if deal passes

The Federation of Small Business’s leader Mike Cherry has welcomed news of a deal, but added:

We have been here before, however, and although both the UK Government and EU have shown determination and a willingness to progress negotiations and deliver this breakthrough – we now need to see this continue if we are to reach a successful Brexit endgame. The Government and Parliament must now work together to ensure this is best deal for the UK small business community.

If the deal is passed – focus needs to turn quickly to the future relationship and ensuring that lessons are learnt from the experience of the last three years.

Many small businesses are just about surviving – not only do they desperately need certainty but they also need the Government to get back to business and focus on meeting the many domestic challenges that have fallen behind Brexit.

 

12:06pm

Don’t Bank on it: Deal throws rate cut into cut

Bank of England

Money markets don’t think a rate cut is looking likely CREDIT: CHRIS RATCLIFFE/BLOOMBERG

With a deal on the table, belief is ebbing that a no-deal exit could occur. That has reduced expectations that the Bank of England may soon have to cut interest rates.

Threadneedle Street officials have doggedly held the bank rate in recent months, saying they would rather wait until the impact of Brexit is clear before they begin a process of monetary easing aimed at stimulating the economy.

Bloomberg reports:

Just two days ago, the market was pricing a full 25 basis-point decrease by November 2020 after policy maker Gertjan Vlieghe said continued Brexit uncertainty would probably require further monetary stimulus.

Now money markets see only a 60pc chance that the central bank will lower its benchmark interest rate by 25 basis points by that time, according to MPC-dated Sonia swaps data from TP ICAP.

Last month, the nine-strong Monetary Policy Committee elected to hold rates at 0.75pc.

Line chart with 2691 data points.
Threadneedle Street policy makers hold interest rates once again
The chart has 1 X axis displaying Time. Range: 2008-11-23 21:21:36 to 2019-10-27 02:38:24.
The chart has 1 Y axis displaying values. Range: 0 to 2.

Chart graphic.
 
Bank of England stays steadyThreadneedle Street policy makers hold interestrates once again201020122014201620180%0.5%1%1.5%2%SOURCE: BLOOMBERG
End of interactive chart

11:52am

Pound back under $1.29 as doubts linger

Pound

The pound hit a 34-year low in early September

After soaring to a fresh five-month high against the dollar and the as news of the deal broke, the pound has weakened slightly. 

It is currently sat just below $1.29, having broken that barrier for the first time since May earlier. Traders – like the rest of us – have two questions on their minds:

  1. Can this deal pass through Parliament?, and:
  2. If not, what happens next?.

It’s a good moment to reflect on how far the currency has shifted: since sinking to a 34-year low of $1.17 at the start of September, the currency has mounted a steady comeback, with foreign exchange desks buoyed by the assumption that a no-deal exit is off the table.

Combination chart with 2 data series.
The pound has come back from a 34-year low to reach a five-month high today
The chart has 2 X axes displaying Time and navigator-x-axis.
The chart has 2 Y axes displaying values and navigator-y-axis.

Chart graphic.
 
From a ditch to a dealThe pound has come back from a 34-year low toreach a five-month high today2. Sep9. Sep16. Sep23. Sep30. Sep7. Oct14. Oct23. Sep14. Oct$1.19$1.2$1.21$1.22$1.23$1.24$1.25$1.26$1.27$1.28$1.29$1.31.2SOURCE: BLOOMBERG
End of interactive chart

Look in the longer term though, and the pound’s weakening through the age of Brexit is still apparent: last year, we saw peaks above $1.40, and it was about $1.50 for much of 2015 – numbers that feel pretty far away right now.

11:20am

Five charts that shows how a Brexit deal will boost the economy

Brexit

EU and Union Jack flags CREDIT: DANIEL LEAL-OLIVAS/AFP

What happens now that a deal in on the table?

Well, if it passes  (that’s a bit if), it could mean more than three years of market volatility, stunted growth and political paralysis could be finally coming to an end, my colleagues Tom Rees and Tim Wallace write:

Now that a draft departure deal has been struck, the economy faces a renaissance, unleashing pent-up investment, sending sterling higher and giving growth a much-needed shot in the arm. 

They’ve put together five charts that show how the economy is set to be boosted if Boris Johnson can get his Brexit deal over the line. Here’s a taster:

Line chart with 2 lines.
Sterling versus the dollar since the EU referendum
The chart has 1 X axis displaying Time. Range: 2016-06-06 11:31:12 to 2021-01-16 12:28:48.
The chart has 1 Y axis displaying Pound versus dollar. Range: 1.1 to 1.5.

Chart graphic.
 
Pound versus dollarThe pound is expected to claw back some ofits losses if a Brexit deal is reachedSterling versus the dollar since the EU referendumPound versus dollarForecast201720182019202020211.11.21.31.41.5BLOOMBERG
 

End of interactive chart

Here’s a reminder of what lies ahead:

 

11:04am

Relief sends European stocks upwards

European investors has welcomed news of a Brexit deal,  send major indices upwards (though the gains aren’t staggering – a lot of the energy may have been blown earlier this week).

Bloomberg TV

CREDIT: BLOOMBERG TV

Responding to the deal, Food and Drink Federation chair Ian Wright said:

The UK’s food and drink manufacturers will welcome the news that a deal has been struck. They will hope that this means, definitively, that a no-deal exit on 31 October cannot happen.  

Our focus now switches to whether this deal can command the support of the UK Parliament, and what the detail of the deal means for our members. Their objectives are securing frictionless trade and regulatory alignment with the EU, our largest market. They also must have access to the workers our industry needs.

OANDA’s Craig Erlam said:

Anyone hoping that the process will be straightforward now is kidding themselves. With Labour whipping for a second referendum on the deal and the Lib Dems unlikely to support anything, there is still a good chance we’re heading for an extension and election, in order to get this over the line. Nothing in Brexit is ever simple.

It’s going to be a wild weekend which will make the market open next week all the more unpredictable. If the deal gets through Parliament, the pound could perform extremely well at the start of next week, despite having already rebounded more than 8pc from the lows a month ago.

10:56am

Markets are elated, but there is still everything to play for

Boris Johnson

Boris Johnson departs from the rear of 10 Downing Street. He will travel to Brussels to attend his first EU Council Meeting today as he hopes to finalise the Brexit Deal CREDIT:  LEON NEAL/GETTY 

With Boris Johnson on his way to Brussels to finalise the deal with EU leaders, he leaves behind markets pumped up by Brexit-deal excitement. 

There is still a huge amount of doubt, however. The DUP are standing by their statement from earlier, and Mr Johnson will still need to win over hard-liners within his own party, who have said they will withhold judgement until they see the final text of the deal.

The parliamentary maths is ugly for the PM – he has to face a Commons that repeatedly rejected Theresa May’s deal (one that was arguably superior to the special Northern Ireland customs arrangements integral to Mr Johnson’s offering), possibly without the DUP’s support:

 

10:45am

…but are the DUP behind the deal?

A potentially massive sting in tale amid this news though – which has slighlty clipped the pound’s wings (though it is still over $1.29):

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