Sterling rose this morning after Prime Minister Theresa May began a round of meetings with European leaders and officials to save her Brexit deal.
London share prices were also higher, although this may have had more to do with bullish international sentiment than with expectations of success for Mrs May.
Yesterday, the government pulled a vote in the House of Commons on its proposed deal for leaving the European Union, due to take place on 29 March next year.
Continental stocks buoyed as trade tensions ease
Facing certain defeat, ministers have postponed the vote, but have yet to say when it will take place.
The pound rose by 0.27% against the to €1.1092 and by 0.46% against the to $1.2621. Against the , its value increased by 0.37% to 142.8450 yen.
All major continental exchanges showed gains this morning. In Frankfurt, the was 0.83% higher at 10,710.10, while in Paris the was 0.81% up at 4,780.62.
In Madrid, the was 0.33% higher at 8,688.90, while Amsterdam’s was up 0.66% at 498.59.
Shares were buoyed in part by signs that US-China trade tensions may be easing, a key issue for big German exporters in particular.
But for sterling, the toll taken by Brexit deadlock in Parliament is seen in its decline from a recent peak of $1.3127 on 7 November to $1.2583 on 10 December, the day the Parliamentary vote was postponed. It was a similar story against the euro, from €1.1495 on 8 November to €1.1062 on 10 December.
Threat of leadership challenge
The pound stood at 149.095 yen on 7 November, dropping to 142.315 on 10 December.
A major stumbling block to approving Mrs May’s agreement – which has been backed by the European Commission and the other 27 EU member states – is an issue that barely surfaced during the 2016 referendum campaign, the question of the border between Northern Ireland and the Irish Republic.
This is unacceptable to the Democratic Unionist Party MPs upon whose votes Mrs May relies. Also, the fact that there is no time limit to the backstop is unacceptable to many Brexit-supporting Conservative MPs.
Jean-Claude Juncker, president of the European Commission, has ruled out a renegotiation of the deal but said there may be scope for clarification of aspects of the agreement.
Meanwhile, Mrs May faces the possibility of a leadership challenge from MPs who believe a different Prime Minister would be able to get better terms from the EU.