Brexit boost for soaring pound

THE pound surged to a three-month high and shares in leading banks and housebuilders jumped more than 10 per cent yesterday on hopes for a Brexit deal.

As Brussels gave the green light to intensive talks with the UK, sterling climbed nearly 2 per cent to $1.267 against the US dollar and by over 1.5 per cent to 1.148 euros.

The UK currency’s rally over the past two days is the biggest since the 2016 referendum. About £15billion was added to the value of Britain’s blue chip companies, with UK-focused Lloyds Banking Group and Royal Bank of Scotland, along with Barratt Developments and Taylor Wimpey, among the major risers.

The FTSE 250 index of mid-sized companies, seen as a more accurate barometer of Britain’s economic health, was up more than 4 per cent.

Deutsche Bank foreign exchange strategists said they were no longer negative on the pound.

JP Morgan sees a 50 per cent chance of a withdrawal agreement being struck a “modified/time-limited” Irish backstop that could get around a major sticking point over customs and border arrangements.

It had previously put the likelihood at just 5 per cent.

Neil Wilson, chief market analyst for Markets.com, said: “Sterling’s rally over the last two days has been astonishing.

“Banks such as RBS and Lloyds with the biggest exposure to domestic markets have been weighed down considerably by concerns about a no-deal Brexit on the economy and the property markets. Today’s rally suggests equity investors are also feeling more confident that a deal can be done in time.”

Federation of Small Businesses (FSB) national chairman Mike Cherry said: “After months lost in the Brexit uncertainty that has hit many of our small businesses, there finally appears to be a glimmer of hope at the end of the tunnel.”