LONDON, Dec 17 — Sterling rose today and was comfortably above US$1.35 (RM5.45) — at a 2-1/2-year high against a weaker dollar — as reports of progress in Brexit trade talks boosted appetite for the British currency.
With only days left to the end of a Brexit transition period on December 31, Britain and the European Union are in the final stretch of talks to keep about US$1 trillion of annual trade free of tariffs and quotas.
British interior minister Priti Patel said the government would work flat out for a trade deal.
The pound jumped above the US$1.35 mark after European Commission President Ursula von der Leyen said yesterday there was now a “very narrow” path to agreement though success was not guaranteed.
Sterling was at its highest level since May 2018 today, extending gains in early trade to US$1.3578, up 0.5 per cent against the dollar.
Against the euro, it gained 0.3 per cent at 90.05 pence.
The pound is benefiting from “an improvement in rhetoric from the UK and EU” on the chances of a Brexit trade deal this week, said Chris Turner, global head of markets at ING.
Prime Minister Boris Johnson said he hoped the EU would “see sense” and agree a deal that respected Britain’s sovereignty.
Analysts are also taking it as a positive sign for the pound that Britain’s parliament will be on standby during its Christmas break, and could be recalled at short notice to legislate if a trade deal is reached.
Analysts do not expect The Bank of England to make any move at a meeting later today.
“With the deal being neither concluded nor rejected, the BoE should adopt a wait and see approach today,” Turner added in a note to clients. — Reuters
