Sterling hits 3½-month high against euro on fresh Brexit hopes

UK economy’s summer performance stronger than expected

Reports of progress on the Border backstop helped to underpin sterling. Photograph: iStock

Reports of progress on the Border backstop helped to underpin sterling. Photograph: iStock

 

Sterling hit a new 3½-month high versus the euro and added to gains against the dollar on Wednesday on optimism that the UK and the European Union can agree a Brexit deal soon.

ITV News reported late on Tuesday that the two sides had made progress in negotiations over a Border backstop, a key hurdle in reaching a Brexit deal.

“We’ve been here before [with Brexit hopes] but this pound move might have a little further to run, especially against the Australian and New Zealand dollars,” Chris Turner, head of foreign exchange strategy at ING, said in a note to clients.

The Times newspaper also reported that about 30-40 MPs from the Labour Party would be prepared to back a Brexit deal that UK prime minister Theresa May is trying to strike with the EU.

Summer surge

The British economy’s summer surge turned out to be stronger than expected as warm weather spurred consumer spending and house building, official data showed on Wednesday.

The data is likely to reassure the Bank of England about the economy’s momentum as Brexit approaches in March but it did not move sterling.

At 9am, sterling was up 0.1 per cent versus the euro at 87.43p but has since moved back to 87.31p.

Against the dollar sterling firmed 0.3 per cent to as high as $1.3186, its strongest level since September 26th, before easing back to trade flat at $1.3142. – Reuters