The rumour mill has long been a nemesis for the ailing pound as the suggestions of numerous leaks and claims in the press have generally put the pound under pressure, particularly in the post-Brexit era.
Tuesday evening, however, offered some substantial relief after a leak suggested that a figure had been agreed between the UK and EU to settle the so called Brexit Bill. This crucial agreement between the two sides, which neither have confirmed, was long thought to be the reason why negotiation haven’t progressed in the last few months.
Although the figure is over twice the £20 billion that the Prime Minister had earmarked, the market is buoyed by the prospect of progress and against the euro, sterling is around 3 cents higher than the lows.
In further positive news, the Irish border issue seems to have taken a turn for the better and, although suggestions were that this could turn into another difficult spanner in the works, hopes of both sides willing to create the best result is providing some comfort.
It’s important to remember that the market spike that we’ve seen is based on not much other than rumours. It does appear that these hold some validity, but of course we don’t know until we know, and the fickle pound may start to react negatively if suggestions infer that talks are not progressing as well as first thought.
For those of you that are looking to secure a rate, be happy that we’re seeing some relief in the pound. This could get better for you over the coming days and week, but of course it might not. Brexit negotiations are taking place again next week. If the tone is anything but positive, then the pound might give up some of the gains that it’s enjoyed this last week or so.
By Luke Trevail, senior currency trader