Pound Sterling takes a breather after earlier rally which brought the GBP/USD close to the earlier struck 1-week peak. Analysts say that improved sentiment over the outlook of a “softer” Brexit are generally helping thee Pound. Markets now believe that the UK’s departure from the EU will be at a softer and slower pace than what was originally envisioned and feared. On Monday, Theresa May, the UK’s Prime Minister, said that she would address fears that Britain might free fall from a cliff into unknown trading conditions upon its departure from the EU. That promise offered business leaders some hope that a transitional agreement of sorts is in the making with the EU so that a new trading relationship can be formed.
As reported at 10:35 am (GMT) in London, the GBP/USD was trading at $1.2436, down 0.50%; earlier the pair had traded at a peak of $1.2512. The EUR/GBP was at 0.855 Pence, up 0.52%; the pair’s daily range is currently from a low of 0.8492 Pence to a peak of 0.8540 Pence.
Hope for Transitional EU-UK Trade Agreement
One currency strategist said that markets have been concerned that the UK government would be fixated on a 2-year deadline for a Brexit which means that a trade agreement would likely not be forthcoming. Their willingness to consider a transitional agreement is seen as positive and what the markets will be focusing on. For reference, the EU’s agreement with Canada took seven years to finalize.