Pound Rises to Six-Week High
(Bloomberg) -- The pound rallied to the highest level against the dollar since August as the U.K. pledged to provide information that could help solve a stand-off with the European Union over the Irish border.
Sterling has been buffeted by Brexit headlines in recent sessions, oscillating between gains and losses in volatile trading as investors attempt to interpret contradicting headlines about Britain’s prospects of reaching a deal by March.
The pound rallied amid broad dollar weakness as data showed U.S. consumer-price inflation slowed last month and after EU negotiators were said to be rewriting a key part of the divorce agreement to try to make it more palatable to the U.K. side.
“It seems that this is the latest installment of what appears to be an effort for the EU leadership to shore up May’s position heading into the Conservative party conference later this month,” said Ned Rumpeltin, European head of currency research at Toronto-Dominion Bank. “That, combined with a more constructive tone out of Draghi and a weaker-than-expected U.S. CPI reading have put the dollar on its back foot.”
The pound climbed 0.4 percent to $1.3096 as of 3:35 p.m. London time, after touching $1.3124, the highest since Aug. 2. It was little changed at 89.18 pence per euro. The yield on U.K. 10-year government bonds rose four basis points to 1.52 percent.
The pound was little moved by the Bank of England’s latest policy decision earlier in the session, which saw the central bank keep interest rates on hold. Officials led by Governor Mark Carney upgraded their view of the economy and pointed to strengthening pay, as they reaffirmed a gradual pace of tightening.
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