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Sterling soars against major currency pairs on better Brexit news

Published: Monday 16 September 2019

  • Pound boosted as Parliament breathes sigh of relief
  • Crucial Brexit meeting in Luxembourg today

As the likelihood of a no deal Brexit diminishes, the Pound soared to the highest level against the US Dollar since July. This sudden growth was triggered by a report in the Times that revealed that Northern Ireland’s largest political party, the Democratic Unionist Party (DUP), was ready to compromise on some European rules after Brexit. However, the DUP swiftly denied the claim.

Pound boosted as Parliament breathes sigh of relief

As Parliament passed the bill that would rule out a hard Brexit scenario after the 31st October, urging the government to negotiate a further extension, the Pound showed stronger signs, strengthening more than 4% over the past week. On Friday, the Pound jumped more than 0.7% against the Euro at over 1.12 and up 1% to over 1.24 against the US Dollar, which represents its highest level in the last two months.

Strong economic figures released last week also encouraged Sterling to strengthen, narrowing recession fears as the UK economy grew faster than expectations. This also reduces the possibility of potential interest rate cuts in the future.

Crucial Brexit meeting in Luxembourg today

Today is an important day for UK Prime Minister, Boris Johnson, as he will meet with the current president of the European Commission, Jean-Claude Juncker, for a lunchtime meeting in Luxembourg. The Downing Street source reported that Boris Johnson “would make clear that he would not countenance any more delays”.

On Sunday, Mr Juncker made it clear on a German radio interview that “no patriotic British person would wish for a no deal Brexit” as it would damage the country and warned that time was running out. During the interview, he spoke of his uncertainty about finding alternatives to the Irish backstop.

The week ahead is dominated by Brexit:

Monday: Boris Johnson meets European Commission President Jean-Claude Juncker for Brexit talks in Luxembourg.

Tuesday: The Supreme Court begins to consider the legality of Mr Johnson's decision to suspend parliament until 14th October.

Wednesday: The European Parliament debates Brexit.
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