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- A deal is imminent and could be agreed as early as Wednesday evening, a senior EU diplomat told Reuters
- Earlier, EU member states began to prepare procedures to put in place a new trade deal with Britain from Jan. 1, sources in the bloc said
LONDON: Sterling rose around 1% on Wednesday and British government bond yields posted their biggest one-day rise in more than a month on signs that Britain and the European Union were on the brink of clinching a deal to govern trade ties.
A deal is imminent and could be agreed as early as Wednesday evening, a senior EU diplomat told Reuters.
Earlier, EU member states began to prepare procedures to put in place a new trade deal with Britain from Jan. 1, sources in the bloc said, indicating a deal was imminent.
There was no confirmation from Britain, however, and sterling eased off session highs after reports that some government officials remained cautious.
"The market is anticipating that a deal will be agreed in the next day or two," said MUG strategist Lee Hardman, adding sterling could strengthen to $1.36/$1.37
He said, however, traders would be keen to see details of any agreement, given expectations that any initial deal will be a bare bones one with specifics to be thrashed out in 2021.
"The best case scenario for the pound would be if we also see details released form the EU and UK side of things alongside the deal to try and reduce the initial disruption when we shift to a new trading arrangement."
The pound which had earlier snapped a three-day losing streak on the lifting of a French border blockage, extended gains to $1.3569, up more than 1.3% on the day. It traded around $1.3505 by 1630 GMT.
Against the euro, the pound was 0.8% at 90.28 pence , having earlier risen to 90.05 pence.