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Pound Rallies After Barnier Comments

The British pound held firm today, after making its biggest gains in seven months yesterday, taking heart from the European Union’s offer of a post-Brexit ‘partnership’.

The pound surged as fears of a ‘hard Brexit’ eased after Michel Barnier signalled an accommodative stance towards London in ongoing talks.

His comments offered some relief to battered sterling bulls who have started pricing in the prospect of a no-deal Brexit in recent days, especially via the currency derivatives markets.

The EU has actually been relatively accommodating for quite a while now and these latest comments make it very hard for the UK government to keep blaming the EU for the risk of a no-deal.

However, Michel Barnier said earlier today the bloc must prepare for a no-deal Brexit, even if its goal was an orderly exit.

The EU needed to be well prepared for everything, Barnier said, telling German broadcaster Deutschlandfunk: “That includes the no-deal scenario.”

He said the issue of the Irish border with Northern Ireland was “the most sensitive point” of the negotiations. Of a solution to the issue, he added: “I think that is possible.”

The British currency rallied to its highest level since Aug. 3 against the dollar. It jumped more than a percent, its biggest daily rise in two months.

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