Sterling held near five-month highs of around $1.28 against the US dollar on Friday morning, down from Thursday’s surge of $1.298 following an announcement that the UK and EU had secured a Brexit deal. However, the government now faces the challenge of a parliamentary vote on Saturday. A “very confident” Boris Johnson may struggle to gain the support he needs after the Democratic Unionist Party (DUP) refused to endorse the deal on Thursday.
Today they urged Tory MPs to vote against the deal, claiming the consensus is not in the best interests of Northern Ireland and ‘tramples all over the Good Friday Agreement’.
Speaking to BBC Radio Ulster, DUP Brexit spokesman, Sammy Wilson said the party hadn’t spoken to the Prime Minister since Tuesday, and added:
“He’s knows us well enough to know that we will not sell Northern Ireland short in the way in which this deal sells Northern Ireland short. So that is probably the reason he hasn’t come to us.”
With limited movement in GBP exchange rates, investors are sitting on their hands ahead of Saturday’s ‘meaningful’ vote which could see another Brexit extension if parliament reject the deal.
Meanwhile, a week of disappointing US data increased the odds of a Federal Reserve rate cut in October and left the US dollar under pressure.
A raft of weak retail sales at the start of the week sparked investor concerns as consumer confidence has thus far been a source of positive growth in an otherwise ailing US economy.
At the same time, US homebuilding plummeted from a 12 year high and US factory output slumped by -0.5 per cent in September.
The US dollar could face further headwinds against the pound if the current Brexit deal gains parliamentary approval and sees the pound reach fresh highs at the opening of next week’s session.