Reports of Brexit financial services deal lift pound, banks
By Oliver Haill
Date: Thursday 01 Nov 2018
(Sharecast News) - A tentative Brexit passporting deal has been struck for UK financial services, reports indicated on Wednesday, which lifted the pound and some sector companies out of their recent slump.
Brussels has agreed to give UK financial services companies continued access to European markets after Brexit, The Times reported. Citing government sources, the newspaper said a tentative agreement has been reached on all aspects of a future partnership on services, along with the exchange of data.
"We are making progress," an official told Reuters, with the financial services deal based on the bloc's equivalence system of market access.
However, an EU official later said some aspects of the Times report were wrong, as the equivalence regime is a unilateral deal, which the EU has been offering to Britain since July, could only ever be unilateral.
The pound, having fallen back close to 16-month lows earlier in the week, was up 1.1% to 1.2908 my mid morning.
Financial services firms has seen a general rally, with RBS, Lloyds and Barclays, which have been weighed down for months by fears of what might happen to the sector in the event of a no-deal Brexit.
Sterling started making gains a day earlier when Brexit Secretary Dominic Raab's indicated that an agreement could be reached by 21 November.
However, Raab was quick to backtrack, admitting just hours after the reports came out that there was "no set date for the negotiations to conclude".
Chris Beauchamp, market analyst at IG, said: "If the EU and the UK really are on a path to a deal, then that should prove positive for sterling, and also give the BoE something to be excited about."
The Bank of England's monetary policy committee meeting is expected to be another non-event, but said Beauchamp, the inflation report is the thing to watch for. "Those who rushed to buy sterling on this morning's deal news will probably endure an anxious time, since there is precious little expectation of any further move in rates for the foreseeable future."
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