LONDON: Sterling held near $1.30 on Tuesday as signs of progress in Brexit talks helped cement gains after investors pushed back expectations for when the Bank of England would cut interest rates below zero.
The pound was last down 0.1% at $1.2966 after topping $1.30 for the first time since mid-September.
Sterling later fell into negative territory, before making up ground after Reuters reported that Britain and the European Union were moving “closer and closer to a deal”.
European Union diplomats told Reuters that Brussels was gearing up to negotiate until as late as mid-November — rather than cutting talks off at the start of next month — to avoid a damaging “no-deal” scenario when Britain’s standstill transition with the bloc ends on Dec. 31.
Sterling last traded down 0.1% against the single currency at 90.91 pence.
Cautious optimism that London and Brussels would reach a deal has been growing in recent days, and most analysts now expect the two sides to do so before the transition deadline.
“We’re getting closer and closer — the talks are miraculously getting slightly warmer,” said Mark Holman, CEO at TwentyFour Asset Management.
“For us looking from financial markets, it does seem stupid not to get a deal done ... If you ask me today, I think it’s probably 50:50.”
Earlier, sterling had touched $1.3007, its highest since Sept. 18.—Reuters
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