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Pound Gains

Sterling shot past $1.30 on hopes that Prime Minister Theresa May will make progress in seeking changes to her Brexit deal with the European Union, although some traders struggled to explain the size of the move.

After edging higher for much of the day, the pound then jumped in late European trading – rising almost one percent versus the dollar by 1615, its strongest since Feb. 5, at $1.3050. The pound was headed for its biggest one-day gain since January.

Some strategists pointed to media reports that May was dropping the so-called ‘Malthouse compromise’, a Brexit proposal that has united both eurosceptic and pro-EU factions within her divided Conservative Party.

Markets appear to have taken the media reports as a sign that Britain is becoming more realistic in renegotiating its agreement with Brussels.

May will meet EU Commission chief Jean-Claude Juncker in Brussels today, pressing on with efforts to find a way to get their Brexit deal through Britain’s parliament and overcome domestic opposition to arrangements for the Irish border after Brexit.

Economic data has assumed less importance in recent months as the scheduled Brexit departure date of March 29 approaches but decent wage growth data, though slightly below expectations, did the pound no harm.

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