Published: Wed, November 14, 2018
Markets | By Otis Pena

Pound surges on hopes of Brexit breakthrough

Pound surges on hopes of Brexit breakthrough

Sterling also jumped as high as $1.3047 GBP=D3 , up more than 1.4 percent on the day. The index hit a 16-month high of 97.693 on Monday.

The dollar fell last week on the belief that losses for US President Donald Trump's Republican party in the midterm elections would make further fiscal stimulus measures unlikely.

The euro weakened below the level of $1.13 in response and dropped to its lowest since late June 2017.

"The combination of strong cyclical momentum in the US and the Fed's gradual rate increases combined with negative developments overseas continues to encourage an even stronger USA dollar", currency strategists at MUFG wrote in a note.

The British pound traded at $1.3009 on Wednesday, gaining 0.3 percent as traders reduced bearish bets after Britain and the European Union agreed a preliminary text that would allow the United Kingdom to leave the EU with a deal that avoids a chaotic "hard Brexit" departure. This would increase the chances of a Fed rate hike in December, making the U.S. Dollar a more attractive investment.

The agreement, even if agreed by the British government and the European Union, has to be voted by the parliaments of both sides.

"The Cabinet will meet tomorrow at 14:00, to consider the draft agreement reached in the negotiating groups in Brussels and decide on the next steps", - said in the office of the Mae.

The pound held near a 10-day low on Monday as the twin forces of a resurgent dollar and reduced expectations of a Brexit deal fuelled a selloff.

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McCarthy said while there was still plenty of scope for further sterling appreciation, it would be prudent to wait on the sidelines until a clearer picture emerged.

"Italy is still a concern for traders and we can see more uncertainty in the euro zone going ahead".

Concerns that the row, along with slowing economic growth, would force the European Central Bank to postpone monetary tightening next year might also hurt the euro, she added.

The UK pound has been victim to wild Brexit-induced swings in the past 24 hours, and the volatility isn't set to end anytime soon. The euro hit a 16-month low of $1.1216 earlier this week.

The dollar gained 0.11 percent versus the yen on Wednesday to trade at 113.93.

The Australian dollar changed hands at $0.7224, gaining 0.12 percent versus the greenback.

The Canadian dollar was marginally lower at C$1.3240, trading near its four-month low brought on by a plunge in the price of crude oil, a major Canadian export.

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