Pound Gains on Potential Brexit-Bill Concessions in Parliament

(Bloomberg) -- The pound rose after U.K. Prime Minister Theresa May’s government signaled lawmakers will get a vote on a Brexit deal in a concession to get legislation through parliament.

Sterling snapped three days of losses after U.K. Brexit Secretary David Davis promised lawmakers that the U.K. won’t ratify any deal without the agreement of parliament, as a Brexit bill faces its first vote where the government might lose. The pound pared gains after labor data showed that the U.K. lost jobs at the fastest rate in more than two years. The data comes just one day before the Bank of England announces interest rates.

“What we’ve seen is a slow capitulation of the U.K. government toward a) what the EU asks for and b) what the softer Brexit Tory rebels have long been calling for,” said Jordan Rochester, a foreign-exchange strategist at Nomura International Plc. “The end destination is still unclear, but the direction of travel is not, and the pound should head higher as a result.”

The pound rose 0.3 percent to $1.3362 as of 11:38 a.m. in London, snapping three days of losses. It gained as much as 0.4 percent earlier.

Sterling dropped from the day’s highs after the number of people in work fell by 56,000 in the three months through October, despite a moderate pick-up in wages.

Sterling’s trajectory has been dominated by Brexit negotiations in recent weeks, with cracks in the unity of the U.K.’s cabinet position weighing since a deal on Friday to move talks onto trade. The EU’s chief Brexit negotiator Michel Barnier said there would be “no going back” on Friday’s agreement.

The pound is still up 8 percent this year, with the Bank of England having raised interest-rates at its last meeting as Brexit’s impact on the economy hasn’t been as bad as feared. While it isn’t expected to move on interest rates on Thursday, traders will be watching if it acknowledges the Brexit progress removes downside risks.

To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net.

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Neil Chatterjee

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