Reports of Brexit financial services deal lift pound, banks
A tentative Brexit 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.
Banks
3,895.51
17:09 19/04/24
Barclays
185.84p
16:40 19/04/24
FTSE 100
7,895.85
16:59 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Lloyds Banking Group
50.92p
16:34 19/04/24
NATWEST GROUP
276.70p
16:34 19/04/24
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, at the same level as US and
“We are making progress,” an official told Reuters, with the financial services deal based on the bloc's equivalence system of market access.
However, EU official laters said many 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.
“Misleading press articles today on Brexit & financial services,” Michel Barnier, the bloc's lead Brexit negotiator, tweeted.
“Reminder: EU may grant and withdraw equivalence in some financial services autonomously. As with other 3rd countries, EU ready to have close regulatory dialogue with UK in full respect for autonomy of both parties.”
The pound, having fallen back close to 16-month lows earlier in the week, was up 1.6% to 1.2966 by late afternoon.
Sterling was given a further lift when the Bank of England signalled its openness to raising rates in the event of a no-deal Brexit.
"While economists typically call for a rate cut in times of economic strife, the potential decline in the pound means that the Bank has to choose between boosting growth with a rate cut, or easing inflation with a hike," said Joshua Mahony, market analyst at IG.
"It seems Carney and co are willing to stick to their core mandate of price stability, hoping that a rate hike would ease cost pressures, thus avoiding a sharp deterioration in real wages."
Financial services firms saw a general rally on the sector reports, 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".