The Brexit saga continues to set the pace for share and currency markets in Europe on Wednesday. Stocks and sterling both opened slightly lower as these assets are retracing yesterday’s gains following the announcement of a draft Brexit deal nearing agreement between Brussels and London. Today’s retracements are explained by both profit taking and a short-term shift in sentiment arising from the latest declaration of the Democratic Unionist Party in Northern Ireland which said, “chances of a Brexit deal are low”.
Technically speaking, this ongoing state of flux is displayed by high volatility levels in Europe, especially towards FX markets like EUR or GBP. The impact of Brexit talks remains limited on stocks so far as the current rally of this asset class is still strongly linked to the recent trade war developments, the monetary policy of Central Banks as well as the important earning season where many big US banks already surpassed forecasts yesterday.
