Sterling falls as doubts grow about Brexit talks
LONDON, Aug 24: The pound fell on Friday after enjoying its biggest one-day gain in months, as investors reassessed whether British Prime Minister Boris Johnson had made any progress in convincing the European Union to renegotiate the Brexit agreement.
German Chancellor Angela Merkel's comments on Thursday that a solution to the Irish border question could be found before Oct. 31, the deadline for Britain to leave the EU, triggered the pound's biggest one-day rise against the dollar since May. Against the euro, sterling gained the most in five months.
But many analysts said the reaction to Merkel's comments reflected market positioning rather than any confidence Britain and the EU would be able to renegotiate their agreement to avoid a no-deal Brexit.
"The market is very short and that is naturally going to make the market very sensitive to any news (that makes them think) ... have we got this wrong?," said Jane Foley, a strategist at Rabobank.
"I've not read an awful lot into these moves," she said, adding that thin summer liquidity had exacerbated this week's volatility.
Kamal Sharma, G10 forex strategist at Bank of America Merrill Lynch, said the market had "over-interpreted" Merkel's comments. -Reuters