Sterling SOARS to five-month high as Britain and Europe agree divorce deal – raising hopes of Brexit by October 31
- Sterling rises 1% above $1.29 which marks five-month high against dollar
- Gains come as PM Boris Johnson heads for crunch EU summit in Brussels
- The pound has gained more than 6% in value against the dollar this week
- Sterling is also up 0.5% against the euro with a pound worth €1.113 today
The pound surged against the dollar today after Prime Minister Boris Johnson revealed a Brexit deal had been agreed with the European Union.
Sterling rose 1 per cent this morning above $1.29 which marked a five-month high for the currency as Mr Johnson headed for a crunch EU summit in Brussels.
The pound has gained more than 6 per cent in value against the dollar this week as hopes increased of a Brexit deal by the end of October 31.
This graph showing the pound against the dollar over the past 24 hours shows how it has risen sharply this morning to above $1.29
The gains come after the pound fell 0.5 per cent earlier this morning after the Democratic Unionist Party said it would not support the deal in its current form.
The pound was also up 0.5 per cent against the euro with a pound worth €1.1129.
Analysts have revised up expectations of Brexit happening at the end of this month while traders have cut back their short positions on the British currency.
Artur Baluszynski, head of research at Henderson Rowe, said: ‘Big win for Boris. If he manages to get it through parliament, we should see a wave of ‘risk-on’ trades coming into UK market.
‘However, let us wait and see all the details and then let the markets decide how likely it is for the UK parliament to accept it. For now, expect some positive momentum in sterling and domestically focused asset classes.’
This six-month graph shows how the pound has risen over the past week to a five-month high
Michael Brown, senior analyst at Caxton, added: ‘Sterling has gained over 1 per cent this morning on news that the UK and EU have reached a deal on Brexit.
Prime Minister Boris Johnson leaves the back of Downing St today on his way to Brussels
‘However, some of the wind has been taken out of the pound’s sails after reports that the DUP are not yet onboard to back a deal. Therefore, the Parliamentary arithmetic for passing a deal looks challenging.
‘Attention will continue to focus on whether the new agreement will pass in the Commons on Saturday, while sterling traders will continue to pay close attention to developing headlines from this afternoon’s EU summit.’
The announcement by Mr Johnson followed days of intense negotiations, but he is expected to face a tough task getting the agreement through Parliament.
With the Commons expected to sit on Saturday to discuss it – the first weekend session for 37 years – the DUP insisted it still could not yet back the Government’s Brexit plans.
The stance of the DUP is important because the party wields influence over some Tory Brexiteers.
Anti-Brexit demonstrators continue to protest outside the Houses of Parliament this morning
In Mr Johnson’s announcement today, he tweeted: ‘We’ve got a great new deal that takes back control.
‘Now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment.’
European Commission president Jean-Claude Juncker tweeted: ‘Where there is a will, there is a deal – we have one!
‘It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that EUCO endorses this deal.’