Sterling rinsed deal-friendly comments from Angela Merkel and Emmanuel Macron for all they were worth on Thursday afternoon.
The German leader said the UK has until October 31st to find a solution to the Irish backstop conundrum, a phrasing that has been seen as more conciliatory – however imperceptibly – than the ‘find a solution in the next 30 days’ comments from Wednesday. Macron, meanwhile, reiterated that the backstop was ‘indispensable’, but that the opposing sides could find ‘something intelligent in 30 days if there is goodwill on all sides’ (good luck with that, Emmanuel).
Reacting as if there had been actual progress made, the pound showed its desperation for good news as it leapt around 1% against both the dollar and euro. Cable crossed $1.223 for the first time since the end of July, while against the single currency sterling found itself teasing €1.1045. The FTSE was not best pleased about this – well, the positive pound part at least – plunging almost 100 points as it returned to 7100.
To be fair to the UK index, its peers weren’t looking too perky either. A pair of weak flash PMIs from the US, including the first contraction-territory manufacturing reading since 2009, alongside another inversion of the American yield curve, cast a red tinge over the markets. The DAX and CAC were down 0.5% and 0.8% respectively, with the Dow Jones dropping 60 points as it fell from 26200.
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