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Pound up after Brexit Secretary says Government may pay for single market access

Published 01/12/2016

Sterling was up 1% against the dollar at 1.26, its highest level in three weeks.
Sterling was up 1% against the dollar at 1.26, its highest level in three weeks.

The pound surged on news that the Government is prepared to consider paying for Britain to access the European single market post-Brexit.

Sterling was up 1% against the dollar at 1.26, its highest level in three weeks. Against the euro, the pound surged 0.63% to 1.18 euro, aided by the eurozone currency's struggles in the face of the Italian referendum on Sunday.

Brexit Secretary David Davis told MPs that ministers want to "get the best possible access for goods and services to the European market" after the UK has left the bloc and suggested the Government is open to the possibility of making contributions to the EU to secure that access.

Neil Wilson, senior market analyst at ETX Capital, said: "Sterling is on the tear this morning on hopes for a soft Brexit.

"David Davis said the UK could contribute to the EU budget in return for access to markets and that has fuelled a rally for the pound.

"Meanwhile the pound has reached its best level against the euro since September as the clouds of uncertainty over Italy's referendum weighs on the single currency. We could get a further fall in the euro if Italy votes No on Sunday."

The rise in sterling comes despite data showing output in Britain's manufacturing industry eased back last month.

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From Belfast Telegraph