LONDON– The British pound jumped near to levels not seen for 31 months Thursday as investors bet the U.K. and the European Union would strike a long-awaited Brexit trade deal.
Sterling climbed 0.8% to around $1.3593, after earlier reaching a session high of $1.3616. Earlier this month, the currency breached a 2020 high of $1.3624, a level it hasn’t struck because Might 2018.
Brexit arbitrators on both sides are said to be on the cusp of striking a narrow open market arrangement on Thursday. It follows months of tense political wrangling over a number of crucial sticking points.
” This is going to be a skinny offer, “Jane Foley, head of FX method at Rabobank, informed CNBC Thursday. “The general feeling is that services are going to be neglected in the cold and talks will continue next year.”
Irish Foreign Minister Simon Coveney said a post-Brexit trade offer was anticipated Thursday, after a “last-minute drawback” delayed a statement.
Timings remain uncertain, with Reuters at midday London time pointing out both an EU and U.K. main stating the deal could still be “hours away.” Interview slated for early Thursday were delayed as both sides settled the “small text” of an agreement on fishing rights, Coveney stated.
Verification of a deal would conclude an extensive period of tense negotiations over the future trading relationship in between Britain and the EU. Both sides have been at chances over a number of key issues, not least fisheries.
The EU wishes to maintain access to U.K. waters for its fishing fleets, while the U.K. wants to mainly suppress these fishing rights. A no-deal scenario could see EU access to U.K. waters end quickly, and vice versa, and the U.K. had even threatened to deploy the military to secure British waters.
Expecting next year, Berenberg’s Senior Economist Kallum Pickering stated a deal would offer support for the pound.
“By removing a significant drawback threat to the U.K. economy both in the near-term and long-lasting, an offer would unlock substantial financial investment in U.K. and support the healing once the continuous coronavirus shock starts to fade, as well as supply a favorable backdrop for U.K. equities and Sterling heading into 2021,” he stated in a note Thursday.