Sterling jumped to a one-week high after Britain-EU draft Brexit Agreement setting out their post-Brexit ties awaiting EU summit approval.
The pound rose as much as one percent versus the dollar after the text was sent to EU governments. It also strengthened 0.7 percent against the euro to 88.41 pence. The draft Brexit agreement states that both parties will have “a trading relationship on goods as close as possible.” The draft text secures no improvements for Britain to proposed future trading relations in financial services with the EU.
Britain is due to leave the EU on March 29, 2019 and diplomats are trying to complete a divorce deal. According to the draft Brexit agreement a transition period can be extended “for up to one or two years.
Brexit negotiations and political uncertainty in Britain remain the key drivers for the pound. Many analysts are cautious about Brexit prospects.
Growing opposition to May’s draft arrangement has hit sterling hard in recent weeks.
Forex – Commodities – Draft Brexit Agreement drove Pound upwards
The euro briefly rallied to the day’s highs on Thursday after Britain and the European Union agreed in principle. The text of the agreement sets out their future relationship before a summit on Sunday.
The single currency rose as much as 0.4% on the news. Further, it hit a day’s high of $1.1434 before trimming gains to stand up 0.2%. The euro’s bounce against the dollar and it rose a quarter of a percent versus the Swiss franc.
The euro’s gains stood in contrast to the weakness of the dollar, which slipped for a second consecutive day. Against a basket of other currencies, the dollar fell 0.2%. The greenback retreated further away from a near 1 1/2- year high hit earlier this month.
Sources: Reuters, CNN money, BBC
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