The pound is trading 0.62 per cent higher at $1.2931 today after Cabinet Office Minister David Lidington said a Brexit deal is “almost within touching distance”.
Prime Minister Theresa May’s de facto deputy has stated that Britain and the EU are on the cusp of a Brexit deal which could be clinched in the next 24 to 48 hours.
“We’re not quite there yet,” Lidington told BBC radio. “We are almost within touching distance now.”
Simon Harvey, Market Analyst at Monex Europe, comments: “Sterling brushes off today’s data as Brexit developments stand front and centre in the market’s eye. Sentiment swings in sterling’s favour today despite rumblings from Westminster suggesting that today may not be the day where we find out the answer to May’s ‘deal or no deal’ spinoff. Regardless, sterling has clawed back all of yesterday’s losses after headlines suggested an exit mechanism for the Irish backstop has been reached. The pound remains reluctant to break the 1.30 level on cable, but its sensitivity to each headline suggests appetite remains by market participants to predict the directional swing that comes with further clarity on a deal.
“The market is almost static this afternoon as traders remain glued to their screens anticipating an emergency cabinet meeting. Should a deal be put on the table, sterling will likely rally up towards the 1.34 level. However, this rally may be short-lived as a key hurdle in the Brexit timeline remains – getting a deal through Parliament.”
Brussels diplomatic sources said the bloc was trying to cajole May into sealing a deal this week and rubber-stamping it later this month, fearing that any delay would increase the chances of rejection by her ministers or parliament.