Pound drops as DUP threatens Boris Johnson’s Brexit olive branch

Pound drops as DUP threatens Boris Johnson’s Brexit olive branch

Prime minister Boris Johnson’s task at the EU summit just became a great deal more onerous, following a statement issued by the DUP this morning. After seemingly appearing on the brink of compromise, the prime minister will now enter talks in Brussels in the knowledge that he is to all intents and purposes, going to have to think on-the-fly, lest he find himself back to square one, as far as the deal-making process is concerned. The DUP are concerned about customs, consent and VAT, and even if Boris manages to ameliorate these issues, he will still have the ‘level playing field convention’ to hash out with the EU, on the employment and environment standards he seems loathed to guarantee. On these developments, the Pound and FTSE fell after the bell.

Speaking on market opening movements, Spreadex Financial Analyst Connor Campbell commented,

“It is going to be one of those days. As Boris Johnson heads to Brussels for a crucial 2-day summit, the DUP have made his trip much trickier.”

“The Northern Ireland party issued a statement this morning stating they ‘cannot support what is being suggested on customs and consent issues’ and that there is ‘a lack of clarity on VAT’. That means either Johnson needs to compromise further, the EU needs to accept the DUP’s demands, or the DUP themselves need to back down. The party did end its statement claiming it will ‘continue to work with the Government to try and get a sensible deal that works for Northern Ireland’, so progress is still possible. It just might need an extension to allow a deal to blossom.”

“Firmly strapped onto the Brexit rollercoaster, the pound tumbled following the DUP’s comments, shedding 0.4% against dollar and euro alike. That fall keeps the gains from this week intact, but takes it from yesterday’s fresh 5-month highs. Not that sterling will necessarily remain in the red; it opened in much the same way on Wednesday, only to end the session up thanks to the positive – but clearly not positive enough – Brexit chatter.”

“Like with Tuesday’s jobs data and Wednesday’s inflation figures, it is hard to see the latest UK retail sales reading meaning much to the pound. Nevertheless, it is expected to rise from -0.2% to -0.1% month-on-month.”

“Despite the pound being in an emotionally unstable place, the FTSE was unable to capitalise on the currency’s losses, instead starting Thursday flat at 7170. This as the Eurozone indices saw a muted open, with the DAX and CAC slipping 0.1% and 0.3% respectively.”

Other news has come from; Elsewhere in political and macro economic news, there have been updates from; Michel Barnier saying a deal is still possibleUK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategythe Supreme Court rules against Boristhe collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).