Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Brexit Deal Priced In To Sterling

Summary

Sterling comes under pressure as Brexit deal priced in.

Lack of yield support is the real driving force for losses.

At their Summit in Brussels, EU leaders have agreed to move the Brexit talks to the second stage which will involve discussion on future trade arrangements.

Talks on trade, however, are not planned to start until March 2018 which has put Sterling under some pressure on Friday with GBP/USD dipping to below 1.3350 with EUR/GBP testing 0.8850 resistance.

To some extent the delay in trade talks is irrelevant as there would be no time to conclude a deal before the March 2019 EU leaving date.

The UK will, therefore, need a transitional arrangement to cover trade. 

Sterling is also being undermined by a lack of yield support with UK gilt yields declining on Friday in comparison with US and German yields. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.