Pound jumps after Irish-UK meeting

Pound jumps after Irish-UK meeting

Sterling jumped against the euro and the dollar, and Irish bank shares surged, after a meeting of Taoiseach Leo Varadkar and British Prime Minister Boris Johnson in Liverpool revived hopes of a deal to unlock the Brexit impasse.

Since the UK voted over three years ago to leave the EU, sterling’s exchange rate has acted as a barometer of fears that the UK would crash out without striking any sort of transition deal.

In recent weeks, the currency has also been weighed down by the uncertainty over the outcome of a possible UK general election.

Sterling climbed 1% against the euro to around 89 pence and surged 1.5% against the dollar to $1.24.

The Taoiseach told reporters a deal was possible by end of the month.

Lee Evans, head of foreign exchange and strategy at Bank of Ireland Markets and Treasury, said that markets will immediately shift their focus to MPs in Westminster and to the DUP in Belfast, if more details of the talks between the two leaders were to emerge.

Irish bank shares also climbed. AIB which jumped 5.5% and Bank of Ireland which gained 4% were also helped by market hopes over the US-China trade talks. “The pound has rebounded sharply after the meeting between Boris Johnson and his Irish counterpart brought a conciliatory tone despite the fears expressed after a combative conversation with Angela Merkel on Tuesday,” said Joshua Mahony, senior market analyst at online broker IG.

“However, while they agreed a solution could be found, it seems the meeting was light on details on exactly how this Ireland-based deadlock could be broken,” he said.

On the trade talks designed to bring a ceasefire to the US and China tit-for-tat trade tariffs, IG said that markets had reacted positively to a tweet by President Donald Trump.

“Despite US rejection of Chinese plans for a partial deal, rumours that the US could consider a currency pact to stave off impending tariffs at least points to some form of de-escalation,” the broker said.

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