Sterling rises by 1% on Brexit news

Why has the Pound risen today?

The Pound has risen sharply this morning on some fresh Brexit news. We were expecting a very quiet day with little in the way of data releases to affect the currency markets. However there have been some surprise developments with Brexit that has caused the Pound to surge…

In the last hour we have seen reports that the EU and UK are both “determined to replace” the so called ‘Backstop’, and that the EU will “recognise the UK’s independent trade policy”. Furthermore there are reports that the UK and EU see a “free trade area and deep regulatory cooperation”.

This has resulted in a nice jump in the value of Sterling, with GBP/EUR rising from €1.12 to €1.13 and GBP/USD rising from $1.2770 to $1.2912.

Theresa May is expected to make a commons statement at 2.30pm this afternoon.

Will the Pound rise further?

This is a very positive development, particularly with regards to the UK making free trade deals outside of the EU and that’s why the Pound has risen. Various hurdles remain such as the EU pushing through the agreement and then parliament voting it through, so we expect further volatility for Sterling. Even assuming all of that happens, we then enter trade negotiations that could last years.

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