Sterling rallied to a near 10-month high on Friday as investors are cheered by the British government’s constructive tone over its Brexit divorce bill ahead of a new round of talks with the EU next week.
The pound climbed as much as 1.1 per cent to $1.3083 – its highest level since last September. The gains come after the British government explicitly acknowledged on Thursday it has financial obligations to the EU after its exit, a move that is likely to avert a full-scale clash over the divorce bill in talks next week.
“So far the UK’s negotiations with the EU have been nothing like the fanfare of bravado and disaster that was once expected by the political commentariat,” said analysts at Nomura.
“The ‘row of the summer’ over sequential exit talks then trade talks (rather than both at once) was quickly compromised over by the UK and in the last 24 hours.”
The acknowledgement was immediately seen by Brussels as a potentially important development. With Britain’s exit set for March 2019, negotiators on both sides feared a protracted stand-off over money would waste valuable time and delay the point at which the EU decides “sufficient progress” has been made to start trade talk