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Pound hits highest level since Brexit vote | Pound hits highest level since Brexit vote |
(about 5 hours later) | |
Sterling has jumped to its highest level against the US dollar since the Brexit vote. | Sterling has jumped to its highest level against the US dollar since the Brexit vote. |
The surge to more than $1.37 came after Bloomberg reported that the Spanish and Dutch finance ministers had agreed to seek a Brexit deal that kept the UK as close to the EU as possible. | |
Both countries denied the report but the currency continued to climb. | |
It gained more than 1% to its highest level since 24 June 2016 and was trading at $1.3733 on Friday evening. | |
The currency had been trading at about $1.50 before the result of the referendum became clear. | The currency had been trading at about $1.50 before the result of the referendum became clear. |
Analysts said the weakness of the dollar had also boosted the currency. | |
"The dollar was really down in the dumps this Friday, the currency losing its way in the face of positive political updates from the Eurozone and the UK, and a disappointing afternoon of US data," said Connor Campbell of Spreadex. | |
Mizuho analyst Neil Jones said the Bloomberg report, if true, was less significant than the sterling rally suggested. | |
"Just because two of the 27 members say this, it doesn't mean a softer Brexit will happen. I doubt it's as straightforward as that," he said. | "Just because two of the 27 members say this, it doesn't mean a softer Brexit will happen. I doubt it's as straightforward as that," he said. |
Neil Wilson at ETX Capital said: "Although the comments came from just two ministers who don't necessarily speak for the Barnier team as such, there is a sense that the direction of travel for the UK with regards Brexit is a lot more positive than it was prior to December. | Neil Wilson at ETX Capital said: "Although the comments came from just two ministers who don't necessarily speak for the Barnier team as such, there is a sense that the direction of travel for the UK with regards Brexit is a lot more positive than it was prior to December. |
"We also have positive language around financial services and the prospect of Britain paying for market access." | "We also have positive language around financial services and the prospect of Britain paying for market access." |
The pound was 0.2% higher against the euro at €1.12810 after the single currency hit a three-year high against the dollar following hopes that chancellor Angela Merkel would be able to form a coalition government in Germany. | |
"Sterling is benefiting from the dollar weakness and the growing euro strength rather any pound-specific factors, which if anything have been underwhelming this week," said Alvin Tan at Societe Generale. | "Sterling is benefiting from the dollar weakness and the growing euro strength rather any pound-specific factors, which if anything have been underwhelming this week," said Alvin Tan at Societe Generale. |
Some traders are concerned that poor Christmas trading reported by several retailers this week was further evidence of a consumer slowdown as inflation erodes spending power. | Some traders are concerned that poor Christmas trading reported by several retailers this week was further evidence of a consumer slowdown as inflation erodes spending power. |
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