Pound pulls back from 5-month high as Brexit deal announced

Summary:

• GBPUSD hits 5-month high near $1.30 on new Brexit deal

• Pound then pulls back on DUP message

• Oil rises despite large inventory build

• S&P500 back at 3000 as MS post strong earnings

• DE30 makes new YTD highs

Once more the pound has dominated today with wild swings seen in the currency. Confirmation that a new Brexit deal had been reached boosted sterling to its highest level since May with the GBPUSD rate coming within a whisker of the $1.30 handle as it seemed that both sides had finally ironed out their differences. 

Any over-exuberrance proved short lived however when it became apparent that the DUP won’t support this new deal and it remains questionable whether it will pass through the UK parliament. MPs are scheduled to sit on Saturday to vote on the new deal and at present it seems that the chances of this getting through the house of commons are on a knife edge. GBP has pared its gains in due course and trades a little lower on balance for the day at the time of writing. 

The weekly crude oil inventories have shown a large build in US stockpiles with the larger than expected rise ending a run of 4 consecutive misses on the consensus forecast. However, this increase shouldn’t come as too much of a surprise given the large rise seen in last night’s API which came in at +10.5M. After dipping lower on the release Oil is actually trading higher at the time of writing with the large build not coming as too much of a surprise given the API reading. The market has been in a fairly narrow range from 58.00 to 59.75 so far this week.

US indices have traded up to their highest level in almost a month this afternoon with sentiment receiving a boost after some upbeat remarks on the trade front from the far east and the announcement of a new Brexit deal - having said that, it should be noted that the strong push higher in the pound has since reversed and therefore this may no longer be seen as that positive.

There’s been similar price action in European indices with the DE30 surging above 12800 to hit a new year-to-date high, but the market has pulled back a little since. On the European cash close the Dax was still slightly higher on the day but there has been a bit of a pullback after the strong gains seen in recent sessions.