BREAKING NEWS

Sterling gives up some gains as Brexit optimism curbed

Sterling gives up some gains as Brexit optimism curbed
FILE PHOTO - British Pound Sterling banknotes are seen in a counter machine at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger -
Copyright
LEONHARD FOEGER(Reuters)
Euronews logo
Text size Aa Aa

By Stanley White

TOKYO (Reuters) – The British pound fell from its highest level in almost five months versus the U.S. dollar on Wednesday as investors started to question their optimism about Britain’s negotiations to leave the European Union.

Sterling also pulled back from its highest in five months against the euro as investors booked profit and prepared for a make-or-break summit between Britain and the EU on Thursday and Friday.

The focus is on last-ditch talks that dragged on late into Tuesday night to see whether the two sides can draft an agreement on Brexit before the summit.

Reports the pair were getting closer to an agreement boosted sterling overnight, though traders said sterling could swing wildly because it is still unclear if Britain can avoid postponing its departure beyond Oct. 31.

“Even if the two sides can agree something, it is unclear if they can stick with the exit deadline,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo.

“Whether Britain’s parliament will approve whatever has been agreed is another big uncertainty. Sterling had a good run-up, but some investors are lightening their positions.”

The pound <GBP=D3> fell 0.20% to $1.2758, pulling back from a five-month high of $1.2800 reached on Tuesday.

Against the euro <EURGBP=D3>, the British currency fell around 0.23% to 86.51 pence. On Tuesday, sterling hit 86.25 pence per euro, the strongest since May 10.

The pound on Tuesday jumped after Bloomberg News reported that negotiators hoped an agreement would be reached by midnight on Tuesday in Europe, but a lack of news in Asia about the results of the talks helped push the currency lower, traders said.

Without a Brexit deal, trade from Britain that previously flowed unhindered across the EU’s single market would be subject to customs tariffs and safety inspections, which many fear would cause economic turmoil.

The yen <JPY=EBS> held steady at 108.81 per dollar, within striking distance of a two-month low.

The Japanese currency initially weakened on Tuesday due to hopes Britain will avoid a messy no-deal Brexit, but those gains were countered in Asia on Wednesday by growing disappointment with U.S. efforts to scale back its trade war with China.

Reports of a “Phase 1” trade deal between the United States and China last week initially cheered markets but the dearth of details around the agreement has since curbed any enthusiasm.

The dollar index <.DXY> against a basket of six currencies rose slightly to 0.03% to 98.322.

(Reporting by Stanley White; Editing by Christopher Cushing)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.
Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.