- Markets Insider
- The British pound jumped versus the US dollar after a report said Germany is prepared to make a major Brexit compromise.
- German officials are prepared to “accept a less detailed agreement on the UK’s future economic and trade ties with the EU in a bid to get a Brexit deal done,” Bloomberg reported.
- The pound climbed almost 1% before slipping back after German officials said their position has not changed.
- By 4.50 p.m. BST (11.50 a.m. ET) it was trading at $1.2902, a gain of 0.37% from its opening price.
- Watch the British pound trade in real time here.
LONDON – The British pound has jumped higher against the US dollar on Wednesday after a report suggested Germany has agreed to a significant compromise with the UK during Brexit talks.
Bloomberg reported, citing unnamed sources, that German officials are prepared to “accept a less detailed agreement on the UK’s future economic and trade ties with the EU in a bid to get a Brexit deal done.”
While Germany does not represent the entirety of the EU, as the bloc’s largest economy, and its de facto leader, its stance is hugely influential.
The news buoyed investors in the pound, as it is likely to be seen as a major concession from Germany, which had previously been highly focused on details.
As such, the pound spiked higher, climbing almost 1% against the dollar on the day, although it remained below the psychologically significant $1.30 level, and remained highly subdued in historical terms. At its peak, the pound dollar exchange rate was at $1.2983, a gain of close to 1% on the day.
“$GBP showing how it is much more sensitive to good news vs. bad news,” Viraj Patel, an FX strategist at Dutch bank ING said in a tweet shortly after the move. “May not last (like post Barnier) but dips make $GBP attractive,”
He added: “The more positive Brexit headlines we get, the harder it’ll be for $GBP bears to ignore.”
Shortly after the initial reports, German officials rebuffed the Bloomberg report, saying their position has “not changed.”
This caused the pound to fall back, and by 4.50 p.m. BST (11.50 a.m. ET) it was trading at $1.2902, a gain of 0.37% from its opening price.