Brexit hopes sends British pound to highest level of Johnson administration as U.K. banks soar
Growing hopes that U.K. and European leaders can reach an agreed deal for Britain to leave the European Union pushed the British pound higher for a second day on Friday.
The pound GBPUSD, +1.7277% rose as high as $1.2706, up from $1.2444 on Thursday, a day when the U.K. currency had its best single day percentage advance since March. Taken together, it’s the best two days of gains in over a decade.
It’s the strongest sterling has been since Theresa May was prime minister. Boris Johnson stepped into the No. 10 Downing Street on July 24.
European Council President Donald Tusk — who has tweeted criticism at British Prime Minister Boris Johnson — on Friday said he received promising signals from Ireland’s Leo Varadkar that a deal is possible.
The European Commission meanwhile said Michel Barnier had a “constructive” meeting with Brexit Secretary Steve Barclay on Friday. The European Union says it has agreed with the United Kingdom to “intensify” Brexit negotiations in a belated attempt to reach a divorce deal ahead of Oct. 31, when Britain is scheduled to leave the bloc.
“The change in tone yesterday from the Irish government and the silence on the U.K. side indeed suggests the U.K. has made some notable concessions,” said analysts at Citi, who said they remained skeptical a deal can be reached by Oct. 31, and that the more likely path is an extension of the Article 50 deadline and a general election.
The pound’s strength weighed on U.K. stocks, as the FTSE 100 UKX, +0.84% increased 0.84% to 7247.08, which isn’t as strong as the rise made by European rivals.