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Sterling jumps as draft post-Brexit deal signals close ties

Sterling jumps as draft post-Brexit deal signals close ties

Mubasher: The UK pound (GBP) climbed on Thursday as a draft agreement between London and Brussels supported a free-trade accord and close cooperation after Brexit.

Sterling pound surged more than 1% to a one-week high as the declaration cleared some uncertainty about the ties after the UK leaves its largest trade ally, the European Union (EU).

By 11:00 am in London, the pound went up 1% against the US dollar to $1.2900, after tapping $1.2927, the highest level since 15 November.

Sterling also gained 0.6% against the euro (EUR) to GBP 0.8853.

By 12:33 pm GMT, the GBP/USD pair climbed 0.69% to $1.2866, while the EUR/GBP pair declined 0.41% to GBP 0.8873.  

The draft on future relations, currently negotiated ahead of an EU summit scheduled for Sunday to rubber-stamp a Brexit deal, sets out regulatory and customs cooperation, and changes a contentious arrangement to avoid a hard border for Northern Ireland.

“Headlines seem to be ticking the right box with regard to FX sentiment, talking about free trade,” Banco Santander Group-of-10 currency strategy head Stuart Bennett told Bloomberg.