- Sterling jumps on announcement of a broad agreement on Britain’s transition out of the bloc.
- “We have reached an agreement on the transition period,” the EU’s chief Brexit negotiator Michel Barnier told a press conference at lunchtime on Monday.
- The pound climbed to a high of $US1.4089, a level not seen since mid-February.
LONDON – The pound jumped more than 1% to its highest level over a month on Monday after the UK and EU announced a broad agreement on Britain’s transition out of the bloc.
The two parties have reached a political agreement on the terms of a post-Brexit transition deal after the UK agreed to a “backstop solution” which would keep Northern Ireland signed up to EU rules after Brexit.
“We have reached an agreement on the transition period,” the EU’s chief Brexit negotiator Michel Barnier told a press conference at lunchtime on Monday.
That news, which was somewhat unexpected, marked a positive surprise to the markets, and caused sterling – which was already up on the day – to jump.
By 12.40 p.m. GMT (8.40 a.m. ET) sterling had pulled off its highs, but was still up by around 0.85% to trade at $US1.4069, as the chart below illustrates:
“Given all the negative noise and speculation over the past few weeks in regards to Brexit (especially from the EU side), today’s tone by UK and EU officials is a genuine positive surprise for investors,” Viraj Patel, a strategist at Dutch bank ING said.
“Some perspective is needed. A lot of GBP’s move is some of the short-term pessimism being re-priced out, rather than any material change in assumptions over the Brexit end-state.”
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