Pound rises on Brexit ‘progress’ report

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The pound has gained strongly against both the dollar and the euro following reports that the UK and Germany have made progress towards a Brexit deal.

Sterling rose nearly 1% against the US currency and 0.5% against the euro after the reports on financial news service Bloomberg.

The agency said the German government was ready to accept a less detailed agreement on future UK-EU trade ties.

However, analysts warned that the EU’s stance was not decided by Berlin.

“Germany does not – despite its clear dominance of the bloc economically – actually speak for the EU position,” said Neil Wilson, chief market analyst at Markets.com,

“[Chief EU negotiator] Michel Barnier may well have something to say about this report. As might Theresa May,” he added.

In afternoon trading, the pound was trading at $1.2961 and €1.1155.

“For the second time in a week, sterling has rallied sharply on hints that progress is imminent in Brexit negotiations,” said Ranko Berich, head of market analysis at Monex Europe.

“Today’s Bloomberg scoop cites people familiar with the matter in reporting that Germany and the UK are prepared to fudge the current October deadline by dramatically dialling back the scope of the initial agreement on the UK’s relationship with the EU.

“Even if confirmed, today’s reports would not represent a breakthrough towards a comprehensive agreement of the sort hoped for by [Mrs] May. But at this stage, it looks like any hint the UK will be able to avoid a no-deal scenario is enough to give sterling strong support.”