Brexit summit goes ahead without a deal

European markets are on the rise amid growing hope of a partial US-China deal. Meanwhile, the pound remains elevated despite the lack of a deal to consider at today's European council summit.

• European stocks rise as hopes of a US-China deal increase
• Weak US retail sales drive dollar weakness
• Brexit deal yet to be reached as European Summit begins

European markets are on the rise this morning, as a more optimistic tone from the Chinese raised hopes of a first stage trade deal with the US. With the Chinese commerce ministry stating that they hope a phase one deal can be agreed as soon as possible, we are seeing traders shift into the yuan in anticipation of a deal. The dollar has been hit hard over the course of the week, with the dollar index hitting a 50-day low against a backdrop of weakening retail sales data released yesterday. While the trade war has had a detrimental impact on US growth, it has been domestic consumption that has propped up the US economy. Thus, with consumption on the slide, there are obvious question marks over future US growth and the need for further Fed easing.

The European Council Summit looks set to go ahead today, despite the lack of a finalised deal to consider. For markets this has failed to really dampen sentiment, as the supercharged negotiations have brought huge relief that Johnson clearly does want a deal after all. The issue of the Northern Irish border remains a key sticking point, and the appearance of the ‘new IRA' highlights the risk of erecting customs infrastructure on the Island of Ireland. For sterling traders, there is plenty of optimism that a solution can be found, even if that means an extension and potential election. The polls signal growing support for the Conservatives, and that support is likely to increase now that we are seeing a desire to reach a deal rather than push for a no-deal Brexit.

Ahead of the open we expect the Dow Jones to open 6 points lower, at 26,996.