UK gilts gain momentum following scant progress in fifth round of Brexit talks

The UK gilts gained momentum Thursday as investors poured into safe-haven assets, following timid progress over the fifth round of Brexit negotiations that cast a shadow over the fate of the British economy.

The yield on the benchmark 10-year gilts, plunged nearly 2 basis points to 1.36 percent, the super-long 30-year bond yields also slumped close to 2 basis points to 1.93 percent and the yield on the short-term 2-year also traded 1-1/2 basis points lower at 0.45 percent by 08:35 GMT.

Three days of negotiations in Brussels produced very little progress, and no breakthroughs on citizens’ rights after 2019 or the financial settlement for the U.K.’s withdrawal from the bloc, an EU diplomat briefed on the discussions said, Bloomberg reported.

Further, Prime Minister Theresa May’s Conservatives remain deeply divided on the shape of Brexit, with the premier struggling each week to tread a careful line between rival camps. The political establishment is so conflicted that late on Wednesday two politicians from opposing parties joined forces to try and effectively bind May’s hands by tabling an amendment that would enshrine a two-year transition in law.

Lastly, expectations were low for the final UK-EU negotiating round before a crucial summit next week, where EU27 leaders are almost certain to declare there has been insufficient progress to move from divorce to trade talks, FT reported.

Meanwhile, the FTSE 100 traded 0.05 percent higher at 7,537.75 by 08:40 GMT, while at 08:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bullish at 118.18 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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