A tweet suggesting there was a “big buzz” among Tory MPs about a possible deal Tuesday afternoon sent the pound higher. The pound-euro exchange rate rose three-quarters of a percent to 1.1056. The pound-to-dollar exchange rate jumped 0.90% to 1.3443.
The pound fell to $ 1.3135 last Friday when Mr Johnson said a no-deal Brexit was ‘very, very likely’.
But it rebounded to $ 1.3444 on Monday, as negotiators agreed on Sunday to “go the extra mile” to try to secure a deal.
The British pound continued this path on Tuesday, up 0.5% to $ 1.3397 at 3:50 p.m., as traders waited for further trading updates.
Shortly before 1 p.m. Tuesday, the pound temporarily fell on news that Mr Johnson had told his cabinet a no-deal was the most likely outcome of the talks. However, he quickly recovered.
Commerzbank’s head of currency and commodities research Ulrich Leuchtmann said the pound was on hold.
Speaking before news of a possible breakthrough in negotiations emerged, he said: “We have the potential to secure a deal before the end of the year.
READ MORE: No Brexit deal: Boris Johnson to strike deal as pound increases in value
At the start of 2021, there will likely be a widespread disruption to the economy, even if a trade deal has been struck.
This, combined with the growing prospect of a further tightening of COVID-19 measures in the first quarter, means the pressure on the bank is not expected to ease anytime soon.
The Prime Minister and the President of the European Commission, Ursula von der Leyen, spoke on the phone on Sunday and agreed to resume talks.
“Nothing confirmed for the moment and the deputies say: many slips between the cut and the lip.
“But MPs are being told the signal will come if and when Jacob Rees-Mogg announces that the Commons will sit Monday and Tuesday next week.
“This would come before any UK / EU announcement. ”
It would represent a major achievement for Mr Johnson, as the EU has pushed for the right to punish its trading partner if he fails to meet his standards.
And he said Tory MPs had been told the UK “has negotiated a joint dispute settlement mechanism” with Brussels.