FTSE Drowns As Covid-19 Restrictions Continue, GBP Surges On Brexit Talks Restart

FTSE Drowns As Covid-19 Restrictions Continue, GBP Surges On Brexit Talks Restart

Spreadex  | Oct 22, 2020 06:06

There was a divergence between the US and Europe this afternoon, while the pound rallied hard on the latest Brexit hopes.

Led to believe a pre-election stimulus package is still alive thanks to comments from Nancy Pelosi and Steven Mnuchin – despite strong Republican opposition – the Dow Jones was able to push 100 points higher after the bell, once again climbing past 28400.

That put it on the other end of the spectrum to its European peers. The increased prevalence of covid-19 restrictions in the UK and on the continent gripped investors on Wednesday. The DAX dove 0.9%, sinking to 12650, while the CAC lost 1.1% as it tumbled below 4900.

The FTSE was hammered as the session went on, plunging 100 points – or 1.7% – as it was set on a course for its worst close since the start of September.

The UK index’s miseries were two-fold. Firstly it was dealing with the same covid-19 crisis as its Eurozone cousins, including news that South Yorkshire has become the latest region to fall under the most severe ‘tier 3’ restrictions.

Secondly, the pound went wild thanks to a Bloomberg report stating that, after a few days of posturing from Boris Johnson and the like, Brexit talks are set to restart, with the intention of reaching a deal by mid-November. This after no. 10 described Michel Barnier’s recent comments – including his belief that a deal is ‘within reach’ – as ‘significant’.

Sterling really let rip, shooting 1.6% higher against the dollar and 1.2% against the euro. Cable is now trading above $1.3146 for the first time since September 8th, while against its single currency rival the pound is at a near one-week peak of €1.1086.

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