The Pound has rallied this morning following multiple reports that Theresa May has offered the EU a settlement bill of up to 50 billion Euro.
Whilst early reports indicate that a deal is close, no final agreement on the amount has been confirmed.
The developments have been given a “broad welcome” by Brussels and may well act as the catalyst to finally move Brexit talks forward.
Sterling made gains across the boards, spiking against the EUR, USD & AUD, three of our most traded currencies.
GBP/EUR hit a high of 1.1315, GBP/USD hit 1.3430, whilst GBP/AUD rates climbed to 1.7695.
This spike can be attributed to an increase in investor confidence and possibly a renewed hope that Brexit talks can finally advance to the next phase.
Whilst the EU have continually said they will not consider moving on to possible future trade deals until the “divorce” bill was settled, the rights of EU nationals in the UK had been agreed and the Irish border separation has been dealt with.
Whilst issues remain regarding these issues, any potential settlement is sure to help advance negotiations and as such confidence in the UK economy has increased and the Pound has spiked as a result.
Personally, I would be tempted to take advantage of the spike, as the UK economy is still likely to remain under pressure over the coming months. Whatever the final bill is to be paid, it is sure to hit the UK economy hard over the coming years.
With many questions still to be answered regarding what sort of trade deal the UK can agree with the EU and how the UK economy may progress in unchartered territory, I would be looking for short-term improvements rather than holding out for longer-term sustainable gains.
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