Exporters here hoping for further sterling rally

Currencies

The currency could rise more than 5pc to 83 pence to the euro if there is agreement. Stock image: Yui Mok/PA

David Chance

November 05 2018 02:30 AM

Sterling's jump at the start of November gave investors a hint of what might happen if there's a Brexit deal in the coming weeks.

The currency could rise more than 5pc to 83 pence to the euro if there is agreement, providing relief for beleaguered Irish exporters.

Even after last week's rally, the pound was still well below levels before the Brexit vote, when one euro was worth 76p.

It currently trades at around 87p to the euro and economists have said it could fall to parity in the event of a no-deal exit.

A Bord Bia survey in June showed 37pc of food and drinks companies would start to experience "severe difficulty" at 90-94p to the euro.

"If we get a deal, almost no matter the content, the pound is cheap," said Nordea Bank AB analyst Andreas Steno Larsen.

However, the road to any deal is likely to be bumpy and the pound will continue to be driven by Brexit headlines until a deal is actually inked.

UK Prime Minister Theresa May has to manage a fractious coalition with the North's Democratic Unionists as well as placate hard-liners in her own party.

An illustration of the fraught nature of the talks came yesterday when Foreign Affairs Minister Simon Coveney was forced to deny the EU had reached a back-door deal with London over eliminating the backstop for the North.

Mr Coveney said a report in the 'Sunday Times' was "unhelpful" and said it was aimed at a British audience. (Additional reporting by Bloomberg)