The pound has edged higher on the news prime minister Theresa May might achieve a breakthrough Brexit deal.
Yesterday the story broke that a draft deal between UK and EU negotiators was in the pipeline and the pound rose 1.4%, trading at $1.3036 against the dollar and reaching €1.1542, a near seven-month high, against the Euro.
The momentum continued this morning and market watchers will be waiting for the outcome of a Cabinet meeting on the draft deal later today.
May has implored her colleagues to back the deal as she attempts to steer it through parliament before the UK leaves the EU next March.
WorldFirst chief economist Jeremy Thomson-Cook says the sustainability of any gains will depend almost entirely on the Cabinet meeting.
He adds solidarity with May will lead to the pound strengthening while a Brexiteer rebellion sure to burst any bubble of optimism.
Barclays Smart Investor head of investment strategy Will Hobbs says signs the withdrawal agreement is taking shape are somewhat offset by the murkier parliamentary maths required to see the agreement through.
Meanwhile research from Canada Life shows advisers are turning increasingly cautious in the lead-up to Brexit.
A survey it conducted in August 2018 with responses from 227 professional advisers shows one in three advisers say they are more likely to recommend defensive stocks because of Brexit, up from one in 10.
Furthermore 19 per cent of advisers are looking at opportunities to invest overseas, up by over 10 per cent.
Canada Life executive director Richard Priestley says: “Although we are only a few months away from Brexit, the impact remains far from clear. Advisers continue to plan client portfolios that address the known and unknown alike. Invest too much outside the UK and you could miss out on a roaring economy.
“Stay in, and potentially watch the value of your clients’ investments fall. With Brexit looming nearer, our research suggests more advisers are likely to take a cautious approach until the impacts are better understood.”