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Key rate movements
- GBP/EUR jumps roughly 0.7% to €1.12.
- GBP/USD breaks through to $1.24, after surging over 1%.
The upswing in Sterling comes on the back of a report in The Times, which suggested the Democratic Unionist Party (DUP) would be willing to abide to some EU rules after Brexit, potentially allowing for some reshaping of the Irish backstop.
While the DUP was quick to dismiss the report, it did little to deter investors who flocked to the pound on hopes the UK and EU may be getting closer to a Brexit deal.
Also contributing to the upside in GBP exchange rates were reports suggesting cabinet members are urging Boris Johnson to request another Brexit extension from the EU rather than disobey a law passed by Parliament earlier in the week.
Today’s gains feed into a broader rally in the pound since the start of September, driven by the recent Brexit optimism and a steady stream of positive UK economic data.
Lee Hardman, a currency strategist at MUFG said: ‘More immediate no-deal Brexit and U.K. recession risks have both eased recently, encouraging a relief rally for the pound.’
Johnson will travel to the continent on Monday for his first face-to-face meeting with European Commission President Jean-Claude Juncker in Luxembourg, with suggestions he could also meet with other EU leaders later in the week.
Johnson’s trip across the Channel could spur further gains in the pound if his charm offensive appears to bear fruit.
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