The British pound jumped on Tuesday, shaking off the losses seen at the beginning of the week, on a report on a possible draft Brexit deal.
A report from Bloomberg suggested that the two sides concluded a preliminary agreement. The report extended the gain following relatively optimistic comments from Michel Barnier, the EU's top negotiator.
GBPUSD, + 0.9916%
shot up to as high as $ 1.2796, following a $ 1.2606 level seen late in New York on Monday. The currency lost ground again on Monday regarding the UK and the EU will not reach a deal by the deadline of October 31
Sterling saw his best two-day run of over a decade late last week. Friday reached as high as $ 1,2706, the strongest since Theresa May was prime minister before Boris Johnson took over in July. Last Thursday, the pound had the best gain in a day since March.
A strong pound weighed the FTSE 100
which traded almost flat despite gains on indices across the US and Europe. Given a large portion of UK companies collecting revenues offshore, a stronger pound could damage their bottom line.
Lloyds Banking Group
LLOY, + 5.24%
and Royal Bank of Scotland
RBS, + 5.07%
totaling over 5% each, while multinational companies including GlaxoSmithKline