Pound Surges As EU's Barnier Fans Brexit Deal Hopes

The pound rallied Tuesday after the European Union's top Brexit negotiator flagged the possibility of a divorce agreement this week, reviving hopes that Britain might yet avoid crashing out of the bloc without a deal

London, (APP - UrduPoint / Pakistan Point News - 15th Oct, 2019 ) :The pound rallied Tuesday after the European Union's top Brexit negotiator flagged the possibility of a divorce agreement this week, reviving hopes that Britain might yet avoid crashing out of the bloc without a deal.

With the exit deadline on October 31, Michel Barnier's comments rekindled hopes that a compromise might be taking shape.

Ahead of a meeting to update EU countries on negotiations, he told reporters: "This work has been intense all along the weekend and yesterday because even if the agreement will be difficult -- more and more difficult to be frank -- it's still possible this week." Sterling surged 0.7 percent against the Dollar to $1.2698, close to levels last seen in July, before easing back slightly. It also firmed against the euro.

The strong pound weighed on London's FTSE 100 index, however, dragged down by falls to share prices of multinationals earning in Dollars.

Before Barnier spoke, the pound had already been rising after Britain's Daily Telegraph said a divorce agreement was forming, with EU and British negotiators hailing a positive day of talks on the Northern Ireland issue.

- 'Whirlwind of diplomacy' - The paper quoted unnamed sources as saying there was "cautious optimism", while the BBC said the EU was considering holding an emergency summit to push through a possible deal. It said there was not enough time to get anything done before a summit set for this week.

The pound had come under pressure on Monday after European officials played down the chances of an agreement that had been aired by British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar last week.

David Kelly at JP Morgan Asset Management said the Johnson-Varadkar talks had sparked a "whirlwind of diplomacy between the British government and the Europeans to try to come up with an agreement this week".

He added in a note: "While it is by no means certain that the UK and Europe can agree to a deal or that such a deal can make it through the UK parliament, there does appear to be recognition from the British side that any Brexit deal will have to treat Northern Ireland very differently from the rest of the UK.

" On Wall Street the Dow Jones index rose at the start of trading, helping eurozone stock markets hold on to morning gains.

Asian equity markets earlier closed mixed as investor caution returned, replacing the optimism fanned by Donald Trump's partial China trade deal.

While Friday's mini-agreement between the world's economic superpowers put off fresh tariffs and saw them reach common ground on some issues, observers pointed out it was light on detail and left other major levies in place.

And despite Trump's insistence that the "phase one" agreement was "the greatest and biggest deal", Beijing said it wanted to hold more talks and called for a delay in other tariffs due in December before it would sign.

Meanwhile the IMF added to global worries about growth, saying Tuesday that the world economy is slowing to its weakest pace since the global financial crisis, amid continuing trade conflicts that have undercut business confidence and investment.

- Key figures around 1330 GMT - Pound/dollar: UP at $1.2634 from $1.2555 at 2040 GMT Euro/pound: DOWN at 87.05 pence from 87.79 pence Euro/dollar: DOWN at $1.0999 from $1.1024 Dollar/yen: UP at 108.43 Yen from 108.39 yen London - FTSE 100: DOWN 0.3 percent at 7,191.63 points Paris - CAC 40: UP 0.6 percent at 5,677.66 Frankfurt - DAX 30: UP 0.5 percent at 12,554.37 EURO STOXX 50: UP 0.6 percent at 3,577.68 New York - Dow: UP 0.4 percent at 26,891.93 Tokyo - Nikkei 225: UP 1.9 percent at 22,207.21 (close) Hong Kong - Hang Seng: DOWN 0.1 percent at 26,503.93 (close) Shanghai - Composite: DOWN 0.6 percent at 2,991.05 (close)Brent North Sea crude: DOWN 0.1 percent at $59.21 per barrelWest Texas Intermediate: DOWN 0.2 percent at $53.49 per barrel