Sterling up after UK finance minister talks up prospect of revised Brexit deal

A bank employee counts pound notes at Kasikornbank in Bangkok, Thailand. (Reuters pic)

LONDON: Sterling rose on Thursday after British finance minister Philip Hammond said that Brexit talks with Brussels had been constructive and that lawmakers could vote on a revised deal as early as next week.

Hopes that Theresa May can secure some changes to her Brexit withdrawal deal from Brussels, and then get the tweaked agreement through British parliament have buoyed the pound in recent sessions.

The resignation of several lawmakers – angry at their leaders’ handling of Brexit – from the ruling Conservative and the opposition Labour parties to sit as independents has encouraged some traders to believe that May will show more flexibility in getting a deal and avoiding a no-deal disorderly Brexit in March.

“I’m not yet ready to turn bullish on sterling, but if more people join the Independent Group, it would be like MPs mutinying against their captains in order to steer the ship away from the iceberg. That could be extremely positive for GBP,” said Marshall Gittler, chief strategist at ACLS Global.

The British currency rose 0.3% to the day’s high at US$1.3086 in early Thursday trading but below three-month highs of US$1.3218 hit in January.

While there was little news out of May’s meeting with European Commission President Jean-Claude Juncker in Brussels this week, finance minister Hammond talked up the prospect of a revised deal.

British lawmakers could be given a vote on a revised Brexit agreement as early as next week as talks with the European Union have been constructive, Hammond said on Thursday.

On Wednesday, Bloomberg had quoted the Spanish foreign minister saying that a Brexit deal was being “hammered out”.

May said after the talks in Brussels that “time is of the essence” as she tries to convince the EU to agree to “legally binding changes” so that the so-called backstop” policy on the Irish border would not bind Britain indefinitely to keeping EU rules.

Against the euro-sterling also gained, up 0.2% at 86.69 pence.