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Forex - Pound Leaps Again as Barnier Stokes Brexit Deal Hopes

Published 10/15/2019, 03:01 AM
Updated 10/15/2019, 03:05 AM
© Reuters.

Investing.com -- The British pound took center stage again on Tuesday, rising sharply against the dollar and euro on renewed speculation of a deal to allow the U.K. to leave the EU smoothly at the end of the month.

By 3 AM ET, GBP/USD was at $1.2667, up 0.5%, while EUR/GBP was at 0.8715, down 0.3%.

The latest wave of optimism was fueled by comments from the EU’s top negotiator Michel Barnier, who told reporters that a deal at a summit at the end of the week “is still possible”.

“I will debrief the EU 27 ministers as usual and just to tell them where we are, where we stand today,” newswires quoted Barnier as saying.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier added.

Barnier has repeatedly stressed the gap between the U.K.’s rhetoric and its ability to deliver effective solutions in a legally enforceable framework.

He said Tuesday that “any agreement must work for everyone,” adding that it is “high time to turn good intentions in a legal text.”

Prior to Barnier’s comments, there had also been rumors of an emergency summit on Oct. 31, only hours before the U.K.’s membership of the EU is scheduled to end. The thinking behind the rally is that such a summit would only take place if it had a reasonable chance of delivering a deal.

The prospect of a Brexit deal has also helped the euro against the dollar. EUR/USD rose 0.1% to $1.1037 by 3 AM. The dollar index, which measures the greenback against a basket of developed market currencies, fell 0.2% to 98.035, its lowest since Friday.

Elsewhere, the Turkish lira bounced after falling to its lowest since a brief currency panic in May, as the “big sanctions” promised by President Donald Trump against Turkey turned out to be more manageable than feared. By 3 AM ET it was at 5.8782, up over 1% from Monday's levels.

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