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UK gilts continue downtrend on Brexit deal optimism wave, BoE Governor Carney’s speech eyed

The United Kingdom’s gilts continued to down-trend during European trading hours Friday as optimism continued to flood market sentiments ahead of the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be delivered today by 17:45GMT.

The yield on the benchmark 10-year gilts, jumped nearly 4-1/2 basis points to 0.722 percent, the 30-year yield sky-rocketed nearly 6 basis points to 1.224 percent and the yield on the short-term 2-year gained close to 4 basis points to 0.546 percent by 12:10GMT.

In the UK, meanwhile, there are no economic data releases of note today, allowing all eyes to remain on MPs ahead of tomorrow’s key votes on the Brexit Withdrawal Agreement in the House of Commons. Johnson’s chances of success took a hit yesterday when the Northern Irish DUP insisted that its 10 MPs would vote against the deal, given the marked difference in arrangements that it would give to the Province compared to the rest of the UK, Daiwa Capital Markets reported.

So, with the Conservatives having just 288 MPs, and 319 votes likely to be required to win a majority, the PM will need most of the independent MPs (many of whom he recently expelled from the parliamentary Conservative Party) and the hard-line members of the Conservative ERG who failed to back Theresa May’s deal, as well as a handful of Labour MPs (who will be ‘whipped’ by the party leadership to vote against) to vote in favour of the deal for it to be approved. So far, the indications are that most of the ERG and ex-Tory independents are largely on board, the report added.

"But the number of Labour MPs to back it remains very unclear. The probability of success, while rising perhaps, looks close to 50 percent in our view," the report further commented.

Meanwhile, the FTSE 100 remained flat at 7,181.85 by 12:15GMT.

By Debarati Bir
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