(26 FEBRUARY 2019)DAILY MARKET BRIEF 1:Pound gains on Brexit postponement

GBP appreciated against G10 currencies and by 0.70% against both the greenback and EUR, with the pound highest against the single currency since May 2017. Currently trading at 1.3172, GBP/USD is heading along 1.32 short-term.

Investors have decided to support Sterling, as the government is expected to rule out a no-deal Brexit and delay its exit beyond the official 29 March deadline. This should push opposition Labour party leader Jeremy Corbyn to request a second referendum on Brexit. So as far as major importers and exporters are concerned, fog is still in the Channel. Stockpiling has started, but we don’t see the Bank of England acting anytime soon.

A sell-off in both equities and treasuries suggest a deeper uncertainty. Caution should be exercised regarding GBP. Despite potential exclusion of a hard Brexit, nothing is solved, and the backing of a second referendum remains weak.