Brexit deal may get through Parliament, Exane says

Traders shied away from pushing Sterling any higher on Thursday despite confirmation that the UK and the European Union had reached an agreement on the terms of the former's withdrawal from the bloc.

But analysts - including those at Exane - were breathing a sigh of relief, telling clients that the 'doomsday' scenario of a no-deal Brexit had now very nearly been expunged and while an election might yet be called, it was not a certainty.

The French broker's analysts told clients: "Saturday will understandably remain a major focus. The result is unclear at this stage.

"But what we should be able to conclude now, is the risk of a 'No Deal' exit has fallen very sharply now. Whether an election is needed pre-ratification - or even a referendum - the doomsday risk appears to be off the table. UK domestics are trading strongly this week along with GBP. As we argued in the recent note - there is substantial scope for this trade to run."

In particular, according to Exane, investors should not dismiss the possibility that the DUP might change tack before Saturday's parliamentary session and accept the deal that was now on the table.

They were now likely to come under "intense" pressure and if they agreed then any opposition from the European Research Group's MPs would likely be minimal, the broker said.

Exane also believed that the so-called 'level playing field' commitments would ease the path to a Free Trade Agreement, in turn reassuring exiled Tory MPs who had back Theresa May's deal and putting pressure on the Stephen Kinnock group of Leave MPs to give serious consideration to backing the government.

As well, although there was only a small possibility of it occurring, the EU Council might decide to block the way to any further Article 50 extension, Exane said, thereby placing further pressure on MPs.

"So, while the Parliamentary numbers do not seem to be there at the moment, do not write-off the chances of this deal making it through on Saturday just yet."