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Pound on reports of possible draft Brexit deal



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.

pound

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

after a weekend of talks did not impact.

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

UKX, -0.03%

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

GSK, -170%

and Unilever

ULVR, -1.65%

lost ground.


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