GBP Depends on Brexit Deal:

GBP depend on Brexit Deal:

Sterling had been on a downward trend since the U.k.'s vote to leave the European Union in 2016 reduced concern over an abrupt break-up with the EU are sending the currency higher.

The pound traded at $1.40 against the dollar Tuesday morning,not only boosted by a weaker dollar, but also because tarders  are more confident  that the U.K. will strike a deal with the EU and thus avoid a so-called hard Brexit, where the U.K. and the EU would be trading under World Trade Organization (WTO) rules.

 "Prime minister Theresa May does not have the political capital or the unity within the government to implement a "hard Brexit" Stephen Gallo, head of European  forex strategy at BMO Capital Markets told CNBC via email.

 The pound has climbed to its highest level in almost two month against the dollar amid hopes that progress on Britain's divorce settlement with the European Union will smooth the way for the start of trade talks.

With fears receding that the UK would leave the EU in March 2019 without a trade deal,currency investors pushed sterling higher against both the dollar and the Euro on Wednesday.

An overnight rally on wall street was followed by further gains in European trading. The pounds was up 0.67% on the day against the dollar at $1.34,and 1.5% up on its low point on Tuesday, before news emerged of a potential breakthrough in the long-running discussions  about money between London and Brussels.


some City analysts warned, however, that the pound's rise would be capped by concerns that the talks could still be derailed in the weeks and months ahead by differences over the amount Britain intends to pay and by the concessions on trade that the EU would be prepare to make.

Jordan Hiscott, agreed, will suspect many hard Brexit advocates from the Conservative party will baulk at a later stage, rumoured to be 80bn-90bn
The rise in the value of the pound, if sustained, would lead to cheaper imports and lower inflation, but would make UK exports less competitive Despite

Sterling's jump over the past two days,it remained well below the highpoint for 2017 of $1.3659, which it hit in late September, and more than 11% below the $1.50 level at which is was trading and a transition before the JEU referendum in the June last year.

Stephen Gallo, European head of foreign exchange strategy at BMO Financial Group in London, said furher process on trade and a transition deal could push sterling to $1.40 over the next six to 12 months.