Pound rises after breakthrough in Brexit talks
The pound has surged against both the euro and the pound due to optimism the UK is close to reaching a Brexit deal.
Sterling reached €1.1542, almost its highest point for seven months. At the same time it rose 1.4% to trade at €1.3036 against the dollar.
The shift occurred after the government announced a significant breakthrough in talks with the EU and produced a draft text of a Brexit deal.
However, analysts warned the BBC that the pound could fall again if Cabinet ministers and Parliament don’t agree to the deal.
"With the UK Cabinet and Parliament yet to agree to the plans, we are clearly not out of the woods yet," said Capital Economics economist Ruth Gregory.
She said she would not be surprised if a deal wasn’t secured until ‘well into next year’, with the pound likely to ‘pull back’ again by the end of the year.
Neil Mellor, currency strategist at BNY Mellon, said Prime Minister Theresa May still had to convince party members as well as the Northern Irish Democratic Unionist Party (DUP), which props up her minority government.
"Ms May’s proposals are tasked with healing an increasingly divided Conservative party while also keeping the party’s DUP allies onside," he said.
Sterling is still 10% lower against both the dollar and the euro since before the EU referendum in June 2016.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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