Yahoo Finance Sterling Consolidates Gains on Brexit Deal Hopes
Investing.com -- The British pound consolidated gains early Friday after its biggest one-day jump in two years in response to signs of a possible agreement on the Irish border problem that has plagued the Brexit negotiations.
By 4 AM ET (0800 GMT), GBP/USD was at $1.2460, up 0.2% from late Thursday and on course for a 1% gain against the dollar over the week. GBP/EUR was up 0.1% at 1.1315, on course for a weekly gain of 0.7%.
Reports suggested that the U.K. had conceded that the province of Northern Ireland would remain in the EU customs area immediately after Brexit – a move that would satisfy EU concerns about the integrity of its border.
However, it could lose the Conservative government the support of Northern Ireland’s Democratic Unionist Party, as well as some Conservatives who baulk at a step they say could lead to the breakup of the U.K.
As such, there is no guarantee that Johnson’s proposals could command a majority in the House of Commons – the same problem that brought down his predecessor Theresa May.
“A lot needs to happen in the next week,” said ING chief economist for Asia-Pacific Robert Carnell. “A deal being agreed and approved over the next week or so still seems unlikely.”
U.K. officials are currently meeting with the EU’s top Brexit negotiator Michel Barnier, whose support for any new proposals will be crucial. Barnier will brief diplomats from member states after the meeting.
Elsewhere, the dollar gave ground against most higher-yielding currencies after President Donald Trump said the first day of top-level trade talks with China went “very well”. The mainland yuan rate rose to its highest level in over two weeks.
The dollar index, which measures the greenback against a basket of developed market peers, fell to 98.312 overnight, its lowest in a week, as the Aussie, kiwi and loonie all made gains alongside sterling. By 4 AM ET (0800 GMT), it had recovered marginally to 98.370.
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