Pound rally to face test

Sterling has climbed for five weeks against the common currency
Chief Investment Office16 Sep 2019
Photo credit: AFP Photo

The pound’s best run against the euro since 2016 will be tested this week (ending 20 September) as leaders from Britain and the European Union seek to make progress in breaking the Brexit deadlock.

Sterling has climbed for five weeks against the common currency, rallying on the slightest hints of Brexit compromise. With British Prime Minister Boris Johnson now scheduled to meet European Commission President Jean-Claude Juncker Monday (16 September) to discuss the “rough shape” of a divorce deal, pound traders will be watching for some evidence of a potential solution.

The British currency has also recovered against a weaker dollar to above USD1.24, after plunging to a two-year low under USD1.20 earlier this month on fears of a no-deal Brexit. The latest leg higher came after reports that the Northern Irish Democratic Unionist Party would accept a new customs agreement to replace contentious Irish border proposals that have been the sticking point in talks, even though party leaders later disputed that.

The pound has proven resilient following a week where the UK Parliament was suspended and the government’s “Operation Yellowhammer” report warned of the potential disruption from a no-deal Brexit. – Bloomberg News.

The US Dollar Index (DXY) fell 0.19% to 98.072 on Friday (13 September), the pound inched 1.35% higher to USD1.2501, and the euro rose 0.07% to USD1.1073. The yen increased 0.01% to 108.09 per dollar.

The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.

The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.