Pound hits 3-1/2 month high

The data is likely to reassure the Bank of England about the economy’s momentum as Brexit approaches

Sterling hit a new threeand-a-half month high versus the euro and added to gains against the dollar yesterday on optimism that Britain and the European Union can agree a Brexit deal soon.

Britain’s ITV News reported late on Tuesday that the two sides had made progress in negotiations over an Irish 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 yesterday.

Labour backing

The Times newspaper also reported that around 30 to 40 lawmakers from the opposition Labour Party would be prepared to back a Brexit deal that British Prime Minister Theresa May is desperately trying to strike with the European Union.

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 yesterday.

The data is likely to reassure the Bank of England about the economy’s momentum as Brexit approaches in March but it did not mark any extra shift in the pound’s fortunes yesterday.

At 0900 GMT sterling was up 0.1 per cent versus the euro at 87.43 pence per euro.

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