Sterling climbs against euro and dollar on hopes for Brexit breakthrough
Pool Barnier Brexit Chief Ap Negotiator Francois Michel Lenoir, European Picture: Union's Via Photo
Sterling rallied against the dollar the most in more than a week, as speculation grows British and European officials are getting closer to striking a trade deal.
Sterling rose as much as 0.9% to $1.3441, extending gains after Times Radio’s political correspondent Tom Newton Dunn wrote on Twitter that both sides have entered the so-called tunnel in Brexit trade talks, a period of intensive negotiations that forms the precursor to any deal.
Sterling also rose against the euro, to 89.2p.
Sterling has been a reliable guide to the prospects of the outcome of the Brexit talks — even since Britain voted in the summer of 2016 to quit the EU.
While negotiators have been in this phase of Brexit talks for several weeks, the jolt higher in the pound shows how eager traders are to jump on signs an agreement is in reach.
With time running short to ratify any agreement before the transition period ends on December 31, momentum is building for a pact.
“The pound is now likely to price a higher chance of a deal on this tunnel headline,” said Jordan Rochester, a currency strategist at Nomura International.
“I am hopeful it’s done by Friday, too," he said.
The pound’s advance comes after a 2.9% gain last month, the best November for the currency since 2006.