BREXIT ANALYST REACTION: What commentators are saying about Brexit deal
Analysts warn that latest EU deal news is “just a step” in Brexit progress
As euphoria over the announcement that the UK had agreed a Brexit deal with the EU faded, analysts sounded a note of cautious optimism.
Michael Brown, senior analyst at Caxton, told the BBC that "some of the wind has been taken out of the pound's sails after reports that the DUP are not yet on board to back a deal".
Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory organisations, said: “The rally is currently being tempered as it needs to get through the UK and EU parliaments.
“That said, there does seem to be a growing sense of optimism that it can get approved.”
“The agreed deal is just a step in Brexit resolution. We still see a lot of challenges ahead,” Marija Veitmane, senior strategist, multi-asset at State Street Global Markets, said. “The economic rationale for both sides to reach the deal has been present for a long time, but unfortunately politics has been standing in the way. Those issues are yet to be resolved."
Many predict significant rises for sterling were the deal, announced by UK PM Boris Johnson and European Commission president Jean-Claude Juncker, to be approved by the UK Parliament.
Nomura currency strategist Jordan Rochester told the Evening Standard: “The market has been building up to this scenario over the past five days. The pound still trades at historically low levels because the market is yet to be convinced a deal will go through Parliament. But were it to go through, the pound would jump significantly. It’s what we call the Eureka moment."
Jonathan Geldart, director general of the Institute of Directors, told the BBC: “Business leaders will feel guarded relief at the breakthrough in Brexit talks." However, he added: “As MPs study the draft deal, they must keep firmly in mind the damage a disorderly exit could cause businesses large and small." He said: “If the immediate choice is between leaving the EU in an orderly versus a disorderly manner, politicians must be mindful of the longer-term consequences their actions may bring to bear.”
Craig Erlam, senior market analyst at Oanda, 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 8 per cent from the lows a month ago," he added.
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