UK, European Union: The pound fell versus the dollar, reversing an earlier rally, as the UK and the European Union said there hadn’t been sufficient progress to move Brexit talks on to trade.
Sterling continued to hold gains against the Euro as the two sides appeared hopeful of progress in time for an EU summit later in the month, with European Commission President Jean-Claude Juncker saying he was “confident” they could meet that deadline. The pound had been boosted earlier in the day by reports a breakthrough was likely.
“The positive tone of Juncker will have some of the ultra gloomy predictions for the summit fading away given it’s clear the EU are seeking progress, too, but positioning had built up in the last few days for a deal to have been made sooner,” said Jordan Rochester, a currency strategist at Nomura International Plc. “The risk-reward is that the politics finds a way around the impasse and we start moving onto transition talks.”
The pound fell 0.1 per cent to $1.3470 (Dh4.95) as of 4.29pm in London, after swinging between gains and losses of as much as 0.5 per cent. It strengthened 0.3 per cent to 88.02 pence per Euro. The yield on UK government bonds rose six basis points to 1.29 per cent, after dropping 10 basis points on Friday.
Sterling has rallied over the past four weeks versus the dollar, partly on the back of a weaker US currency. A deal to move talks onto trade could drive the pound to new highs for the year, while a lack of positive developments could drive it below $1.33, according to Neil Jones, head of hedge fund sales at Mizuho Bank Ltd.
