Sterling smashed through the €1.16 and $1.31 marks after being boosted by a report claiming Northern Ireland’s Democratic Unionist Party has privately decided to conditionally back Prime Minister Theresa May’s Brexit deal next week. The boost for the pound has seen the UK currency climb around 1.8 percent this week, pushing to $1.3114 yesterday, its highest since 8 November, 2018. Against the euro, the pound reached as high as €1.1602 in Asian trading hours. As of just before 9.00AM UK time, the pound had slowed pace to trade at $1.3085 and €1.1553.
But Michael McCarthy, chief markets strategist at CMC Markets in Melbourne, said he expects the pound could advance again should the DUP report prove true.
He said: “If this report is true, I expect sterling to rally to 1.32 versus the dollar.
“A technical breakout to 1.38 is also a possibility.”
The DUP has reportedly pledged their backing to Mrs May if her Brexit deal includes a clear time limit to the Irish backstop, The Sun reported.
It is understood discussions are currently ongoing between the Prime Minister and Arlene Foster in a bid to make a major Brexit breakthrough ahead of the January 29 ballot.
The House of Commons will vote next Tuesday on alternative Brexit plans after it rejected the deal Mrs May negotiated with the European Union.
DUP leaders fear Tory Remainers siding with the Labour Party could see Mrs May’s deal voted down to pave the way for a second EU referendum.
A senior DUP source said: “If she fails on Tuesday, Parliament will take over and we lose any semblance of a decent Brexit.
“We have to help her now, so we’ll vote with the Government if they agree the right amendment.
“That’s looking like a short time limit to the backstop at the moment.”
In other Brexit news, the Queen has spoken in favour of individuals seeking “common ground” and “never losing sight of the bigger picture” in what today’s newspapers have interpreted as a nod to the Brexit debate.
The monarch also extolled the virtues of “respecting” the other person’s point of view, in a speech to mark the centenary of the Sandringham Women’s Institute (WI).
As head of state, the Queen remains publicly neutral when it comes to political matters and does not express her views on issues.
But commentators were likely to see her words as a nod to the toxic mood of the public debate around Britain leaving the EU.