STERLING climbed yesterday to its highest level against the dollar since last summer, building on significant gains on Tuesday, amid continuing relief over a seemingly reduced risk of a no-deal Brexit occurring.
The pound had risen by nearly two cents on Tuesday, when Prime Minister Theresa May said MPs would be able to vote for a delay to Brexit or a no-deal outcome if Parliament did not approve her withdrawal agreement with the European Union. The votes are due to be held by March 12.
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The jump in the pound since Mrs May’s pledge on votes signals a belief among foreign exchange traders that MPs will not vote for a no-deal outcome. The Bank of England has warned that a no-deal Brexit could usher in a recession deeper than that triggered by the global financial crisis around a decade ago.
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Sterling was last night trading around $1.3318, up by 0.66 cents on its close in London on Tuesday. The pound touched an intra-day high of around $1.3349.
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The pound was trading close to $1.50 in June 2016, just ahead of a Brexit referendum result which wrongfooted financial market players.
Sterling also made gains against the euro. The single currency was last night trading around 85.37p, down by 0.46p on its Tuesday close.
The pound meanwhile rose to its highest for 10 months against a trade-weighted basket of currencies, according to an index published by the Bank of England.
David Madden, analyst at CMC Markets, said: “[Sterling-dollar] hit a seven-month high as sentiment surrounding Brexit continues to improve. Traders believe there is an increased possibility that Brexit will be delayed.”
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