Pound Advances on Glimmer of Optimism Around Latest Brexit Talks
(Bloomberg) -- The pound surged to its highest in over a month against the dollar on speculation this week's Brexit talks might start to yield a hint of progress.
Sterling is on its longest rising streak versus the greenback since April. While the U.K. and European Union have shown few signs of ceding ground, the Times newspaper reported the potential for compromise from London, ahead of a end-month deadline to extend the Brexit transition period beyond this year.
That is adding fuel to a recovery in the pound after it slumped in May, when intransigence in the Brexit talks compounded with a roster of poor economic data from the coronavirus epidemic. The easing of lockdowns is now improving global sentiment for riskier assets and putting the dollar under pressure, helping to lift sterling.
“There are slightly better odds for a deal and that might be keeping the pound in the upside this week,” said Olivia Alvarez Mendez, a foreign-exchange market analyst at Monex Europe Ltd. “Even a no-deal scenario could be a relief for sterling in the medium run as it implies the end of the long-lasting period of uncertainty.”
The pound gained as much as 0.7% to $1.2576, building on Monday's 1.2% rally to touch the highest since May 1, before trading up 0.4% at $1.2536. Against the euro, it rose as much as 0.5% to 88.67 pence, the highest in more than two weeks.
Pound Investors Have Too Much on Plate to Obsess About Brexit
There's still the potential for negative headlines in coming days. Traders will now have their eyes fixed on the next EU summit later this month, when heads of state will assess progress on the talks, as well as signs of an economic recovery.
©2020 Bloomberg L.P.
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