GBP flying high on reports of an agreement in principle on the Irish border - BBH
Analysts at BBH suggest that sterling has been bolstered by reports that an agreement in principle on the Irish border may be at hand.
“Time is running out. Prime Minister May's lunch with Juncker this coming Monday appears to be the key deadline. The UK would likely have to affirm its commitment to the Good Friday Agreement. Ireland wants to have a written commitment that regulatory regime will not diverge post-Brexit. It is a difficult issue. It comes down to where a harder border will exist--between Northern Ireland and the Republic, which all parties say is unacceptable, or a hard border in the UK to demarcate the special status of Northern Ireland, as in the Hong Kong-China model.”
“In the ten sessions before this week, sterling appreciated in eight. After slipping Monday, it is up for the third consecutive session today. The year's high was set on September 20 near $1.3660. Provided it holds above $1.34, that is the next important target.”