Sterling rises on reports UK-EU deal on N.Ireland still possible

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LONDON, Nov 12 (Businesshala) – Sterling rose on Friday after reports suggested Britain was de-escalating tensions with the European Union and renewing efforts to find a solution to Northern Ireland’s trade dispute.

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Sterling was under renewed pressure this week, amid concerns that disagreements between Britain and the EU could trigger major trade disruptions.

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Since leaving the European Union last year, Britain has delayed launching some border checks between the British province of Northern Ireland and EU member Ireland.

The Times newspaper reported on Friday that Britain was ready to back down, after unilaterally invoking emergency provisions and threatening to find a deal with the European Union.

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Sterling rose 0.2% to $1.3385 against the dollar at 0940 GMT, not far from its December low of $1.3354. It was set for a third consecutive week of decline against the dollar. GBP = D£

Against the euro, it rose 0.25% to 85.47 pence and was set for weekly gains after declining against the single currency in the previous week.

“Today’s move in the pound is a reflection of easing Brexit tensions and removing downside risk to an already weak growth narrative,” said Simon Harvey, a currency analyst at Monex Europe.

Sterling fell more than 6% against the dollar in the past six months as the British economy grapples with supply chain disruptions, labor shortages and a fuel crisis.

Meanwhile, rising US inflation boosted the greenback amid a bet that the Federal Reserve would raise interest rates faster than expected.

Triggering a sterling sell-off, the Bank of England left its key interest rate unchanged at 0.1% at its November policy meeting, having previously indicated it may raise it.

Markets are now pricing in a high probability of a December rate hike but uncertainty remains high.

Britain’s Brexit Minister David Frost will meet with Maros Sefkovic of the European Commission in London on Friday to discuss changes to trade rules.

Reporting by Joyce Alves, Editing by Andrei Khalipi


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