Sterling rose on Wednesday following a media report that British Prime Minister Theresa May is attempting to win over the Northern Irish DUP party in a crucial vote next week on her Brexit deal.
May plans to counter the bitter opposition to her deal from the Democratic Unionist Party by publishing a series of commitments to the people of Northern Ireland, Sky News reported on Wednesday.
The pound jumped to a day’s high of $1.2777 before losing ground when the DUP called May’s plans to offer concessions on provisions on Ireland’s post-Brexit border “meaningless”.
Against the euro, the pound rose 0.2 percent to a day’s high of 89.76 pence.
The British parliament is due to vote on the EU withdrawal bill on Jan. 15 and the issue is likely to dominate sterling trade in the run-up. May will lose the vote unless she can convince opponents both within and outside her Conservative Party to back the deal.
“A positive vote on the exit agreement with the EU next week has not become any more likely. So please do not go ahead and buy sterling hoping that a no-deal Brexit has become less likely … Beware of false hopes!” Antje Praefcke, an analyst at Commerzbank, wrote in a note.
The risk of sterling falling against the dollar is deemed the lowest in over six months, according to cable option pricing.
Sterling’s relative strength in recent days is mostly down to dollar weakness – the pound’s performance against the euro has been more muted.
