LONDON: Hopes that a coronavirus vaccine would put the British economy back on track pushed the pound 1% higher versus the euro on Tuesday.
Comments from UK government officials that a deal was imminent on a post-Brexit trade agreement with the European Union also boosted sterling, feeding hopes for a deal by year end.
The pound was last trading at 89.20 pence against the common currency, having hit a two-month high of 88.85 pence, making it 1% stronger. Any rise above 88.66 pence would take it to a five-month or six-month high.
Sterling also extended gains versus the US dollar, trading last up 0.6% on the day at $1.3242, having touched a two-month high of $1.3278.
Traders shrugged off a report that British employers made a record number of staff redundant in the third quarter. Brexit optimism added to growing appetite for riskier assets after Pfizer and BioNTech on Monday announced a promising coronavirus vaccine. Echoing comments by Prime Minister Boris Johnson, British finance minister Rishi Sunak said on Monday that Britain and the EU have made progress in talks about a trade agreement and a deal can be done. Sterling could go as high as $1.40 by the end of the year if Britain and the EU agree on a trade deal this week and "talk of negative rates melts away," said Kit Juckes, macro strategist at Societe Generale.-Reuters
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