Pound climbs as PM claims Brexit breakthrough on eve of Commons vote
Sterling has climbed sharply against both the dollar and the euro as currency markets weigh the chances of a Brexit breakthrough.
Tuesday 12 March 2019 09:10, UK
The pound has climbed sharply as Theresa May claims victory in her bid to win legally binding changes to the backstop element of her Brexit deal.
Sterling jumped as high as $1.3290 when the development was announced following the prime minister's dash to Strasbourg to formally agree the move.
It also hit a 22-month high versus the euro at €1.1780.
However, those gains later slipped back slightly as it was clear Mrs May still faced an uphill battle to secure enough support for her deal among MPs in Tuesday evening's crucial Commons vote.
:: May's 'legally binding' changes might not be enough for MPs
Sterling's shift began as the PM flew to meet European Commission president Jean-Claude Juncker.
Meanwhile Irish Prime Minister Leo Varadkar, who had been due to travel to the US for St Patrick's Day, returned from Dublin airport for an emergency cabinet meeting.
Jeremy Cook, head of FX strategy at WorldFirst, said ahead of the talks: "We are starting to see some signs of movement from London and Brussels and that is helping sentiment."
Defeat for Mrs May in parliament on Tuesday would prompt a "no deal" vote on Wednesday - a scenario likely to be rejected by the Commons as economically disruptive - and a potential Thursday vote on whether to request an extension to the 29 March Brexit date.
Analysts said sterling's strength on Monday evening was partly due to increased bets on MPs opting for a delay and a "hard" Brexit being averted.
Kallum Pickering, an economist at Berenberg, said: "A delay to Brexit would be modestly positive for sterling, reflecting the reduction of the risk of a hard Brexit.
"However, it would not completely eliminate the hard Brexit risk which could still come at the end of a delay or as a result of a second referendum."