Investing.com - The pound jumped more than 1% on Thursday amid reports that the UK and the European Union are close to a deal on a crucial part of Brexit, while the dollar was broadly lower, pressured by gains in sterling and the euro.
GBP/USD was up 1.17% to 1.2916 by 04:40 AM ET (08:40 AM GMT), the highest level in just over a week.
Reuters reported that the UK and the EU are close to a deal that will allow UK financial services companies based to have some access to European markets after Brexit.
The Times newspaper reported that a tentative deal had been struck.
The reports came ahead of the Bank of England’s latest interest rate decision later in the day, with the bank widely expected to keep monetary policy on hold amid uncertainty over the economic impact of Brexit.
Sterling rose to one-and-a-half week highs against the euro, with EUR/GBP down 0.73% to 0.88.12.
The euro was higher against the softer dollar, with EUR/USD advancing 0.59% to 1.1378.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.57% to 96.35 after gaining 2.28% in October.
The dollar has been boosted by expectations for a faster pace of rate hikes from the Federal Reserve going into 2019 as the U.S. economy remains strong.
The dollar was little changed against the yen, with USD/JPY changing hands at 112.86.