Sterling hits one-month high vs euro on 'Brexit breakthrough' hopes
Sterling jumped to a one-month high against the euro on Monday after a member of the European Parliament’s Brexit group said there was a “very good chance” of a deal on an initial divorce package between Britain and the European Union.
Elmar Brok said he was “astonished” at how far the negotiations had come and that differences remained over “just a few words”.
British Prime Minister Theresa May will have lunch with European Commission President Jean-Claude Juncker and European Union Brexit negotiator Michel Barnier on Monday in Brussels, where she will try to persuade them to start discussions on a new trade pact and a two-year transitional deal.
The European Parliament’s Brexit coordinator Guy Verhofstadt sounded a more cautious tone than Brok, telling reporters that the chances of a deal when stood at 50-50, with Parliament still pressing for more from London on guarantees for the rights of EU citizens in Britain
But traders were optimistic, with sterling reaching as high as $1.3525 after the comments, up from around $1.3440 beforehand.
“To me, this is a Brexit breakthrough and it should be solid for the pound,” said Neil Jones, Mizuho’s head of hedge fund currency sales in London.
“I sense that we’re moving towards a sign-off that will enable the UK to move into trade talks and that’s only going to be a good thing for the pound.”
Against the euro, the pound climbed 0.8 percent on the day to a 87.68 pence, up from 88.17 pence.