(26 NOVEMBER 2018)DAILY MARKET BRIEF 1:Brexit Deal in place but limited market reactions

On Sunday, European Union leaders accepted a Brexit deal package from UK Prime Minister May. Currently EU leaders, with the exception of Spain, are backing the deal but time will tell if the political divisiveness doesn’t demolish the current optimism. While Europe stocks are expected to open higher, sterling is relatively unmoved. The lack of market reaction highlights the weariness investors have with the Brexit negotiations. The focus now turns to the 'meaningful vote' on the deal in the UK Parliament. 
The ramped-up rhetoric has heightened the stakes on the Brexit vote with many politicians risking it all for one direction of another. This creates a dynamic where government has a challenging task ahead of them to convince objectors to accept a less-than-perfect deal (which does not exist). Under scrutiny it’s likely that cracks will appear, weakening the probability of sufficient votes and strengthening fears of a hard Brexit. The Brexit headlines will continue to dominate and hinder the rate from rising. 
Given the 'noise', negatives on GBP are already priced in. The complexity of the withdrawal deal is sustaining high short-term implied volatility. The GBP/USD trading range will remain constricted between 1.2770 and 1.2900.+