Brexit deal hopes lift sterling
|Heading into the close the FTSE 100 is 30 points higher, while the pound has made good gains as a UK-EU deal takes shape.
- Boris pulls a rabbit from his hat
- But Parliament will be a tough environment
- Unilever steady after sales weakness
They all said it couldn’t be done, but it has. Boris Johnson has succeeded in getting, in double-quick time, a new deal with the EU. There will be ample criticism of it, and analysis could well show it is not as good in some respects as May’s deal, but his supposedly ‘sham’ negotiations have still resulted in a deal. Whether it passes Parliament at home is another matter entirely, and the various factions in the House of Commons will no doubt seek to make as many amendments as possible, but for the first time in months a way forward for the UK and EU exists. Jean-Claude Juncker’s declaration of ‘no prolongation’ could well concentrate minds, but it is not his job to decide on extensions. It has been a volatile day for the pound, and for UK assets, and there will be more to come as MPs gear up for their Saturday sitting. We have a deal, but the future is far from certain.
Having seen the shares fall 14% since late August, Unilever investors will be hoping that today will mark a low for expectations regarding future performance. Emerging markets have been the firm’s undoing of late, but if this is now mostly behind them then the current price might look like a good deal in a few months’ time. Even excluding dividends, the share price has comfortably beaten the FTSE 100, providing a haven from Brexit troubles. A return to above-forecast revenue growth would be just the ticket for a rebound in the share price.
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