Sterling breaches $1.25 as EU's Tusk hails signs of progress on Brexit talks
By Michele Maatouk
Date: Friday 11 Oct 2019
(Sharecast News) - Sterling hit a three-week high on Friday, rising above the $1.25 mark after European Council President Donald Tusk said he had received "promising signals" that a Brexit deal was possible.
At 1040 BST, the pound was up 0.5% against the dollar at 1.2501 and 0.4% higher versus the euro at 1.1344.
In a televised statement in Cyprus, Tusk said: "Unfortunately we are still in a situation in which the UK has not come forward with a workable, realistic proposal."
He said he told UK Prime Minister Boris Johnson last week that if there was no such proposal by now, he would announce publicly there are no more chances of a deal at next week's EU summit.
However, Tusk also said that he had received "promising signals that a deal is still possible" from Irish premier Leo Varadkar, who met with Johnson on Thursday.
"Technical talks are taking place in Brussels as we speak. Of course there's no guarantee of success and the time is practically up, but even the slightest chance must be used," Tusk said.
Sterling suffered a brief slump in the wake of Tusk's comments as traders focused on the negative points, but the currency soon perked up again.
David Cheetham, chief market analyst at XTB, said: "It appears that this was something of a false move as additional comments were actually far more constructive than has been the norm of late from Tusk but it just goes to show the heightened sensitivity in the markets to any Brexit headlines at present."
Brexit Secretary Stephen Barclay is back in Brussels for talks with the EU's chief Brexit negotiator, Michel Barnier, after Johnson and Varadkar said on Thursday that they could see "a pathway" to a possible deal.
Sterling surged to its best levels in seven months on the back of Johnson and Varadkar's upbeat statement.
Joshua Mahony, senior market analyst at IG, said: "With the pound driving higher off the back of an optimistic tweet from Tusk, it is clear that GBP traders will find plenty of volatility given the raft of statements coming out from both sides."
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