The pound has rallied to an almost 10-month high in response to comments from the UK government ahead of a new round of Brexit talks with the EU next week.
Sterling rose as much as 1.1 percent to $1.3083 — its highest level since last September.
The UK government admitted that Britain would still have financial obligations to the EU after its departure from the union, hoping to strike a more conciliatory tone with EU officials.
Analysts at Nomura told the Financial Times:
So far the UK’s negotiations with the EU have been nothing like the fanfare of bravado and disaster that was once expected by the political commentariat. The ‘row of the summer’ over sequential exit talks then trade talks (rather than both at once) was quickly compromised over by the UK and in the last 24 hours.
However, not all market analysts are optimistic that the sterling will continue to make gains.
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It is too early for the market to gauge whether the Brexit talks are going to go one way or the other. I still think there will be a lot of resistance around $1.32-$1.33 [to further sterling gains].
The UK is expected to leave the EU in March 2019.