Pound Advances on Conciliatory Tone in Brexit Trade Negotiations

(Bloomberg) — The pound rallied on cautious optimism that this week’s final round of scheduled Brexit trade negotiations could pave the way for a breakthrough.

Sterling outperformed major currencies to rise as much as 0.8% to $1.2842, the biggest surge in nearly two weeks, as investors digested a more conciliatory tone from officials on both sides.

“Sterling is benefiting into the start of the week from mildly positive tone ahead of Brexit negotiations,” said Jeremy Stretch, head of G-10 currency research at Canadian Imperial Bank of Commerce in London. “The general risk-on tone is also good for sterling.”

The EU’s chief Brexit negotiator Michel Barnier and his British counterpart, David Frost, will hold a final round of scheduled discussions starting Tuesday. Both sides have expressed cautious optimism a deal can be reached.

If they make enough progress by Friday, they could embark on a two-week period of intense discussions — the so-called Brussels “tunnel” — to hammer out an accord in time for a summit of European Union leaders on Oct. 15.

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