LONDON: Sterling was set to end at a loss on Thursday after markets swung on contradicting assessments of prospects for Britain and the European Union to reach a Brexit deal.
The pound had a tumultuous day, rising and falling in direct response to Brexit-related news, as Britain and the EU neared the end of the last scheduled round of trade talks before the bloc's leaders assess progress on Oct. 15-16.
A Reuters report that British and EU trade negotiators had failed to bridge their differences on state aid saw sterling fall to as low as $1.2819 in the morning.
It then reversed course and rose to as high as $1.2979 after a Financial Times reporter tweeted that a "landing zone" for state aid had been identified and that fishing - long a source of friction - remained the last sticking point.
Three hours later, it flipped again, falling sharply after an EU official dismissed the tweet as unfounded "UK spin".
"If the headlines continue and we've got the EU/UK updates which continue to remain bullish to the pound one moment and bearish to the pound one moment - and my guess is that's what we do have in store - volatility will be greater and the potential ranges for the pound on a daily basis will be greater as well," said Neil Jones, head of FX sales at Mizuho.
At 1458 GMT, the pound was at $1.2868, down 0.4% on the day.
Versus the euro, it was down 0.4% at 91.205 pence, having swung between 91.55 and 90.65 during the day.
A gauge of sterling overnight volatility rose to its highest since March.
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