Brexit: Pound bounces along with optimism over Brexit talks

The pound has jumped to its highest level in five months as a result of reports that the two sides in the Brexit talks are closing in on a draft deal. Shares in banks and house builders also soared as optimism about a breakthrough buoyed companies with a UK focus.

It was hoped that a preliminary deal might be reached on Tuesday, ready to go before a summit on Thursday. Sterling rose 1.5% on the dollar to $1.28, and by a similar amount against the euro to 86.3 pence.

On the FTSE 100, shares with a big exposure to the health of the UK economy rose sharply. Builders Barratt Developments and British Land were up about 6%, and Lloyds Banking Group and Royal Bank of Scotland rose more than 5%. Next, ITV and Ocado were also big risers.

Morten Lund, a senior forex strategist at Nordea, told bbc.com: "The reaction from the markets shows they want to get this deal over and they are ready to push the button at the slightest sign of a deal."

But he said he was "a bit more sceptical about the outcome" given how little time remained to negotiate and the difficulties of getting a deal through the British Parliament. The UK is due to leave the EU on 31 October.


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