Investing.com - The pound rallied on Wednesday as news broke that the UK had EU had reached an agreement on the Brexit divorce bill.
The pound pushed above the $1.34 level, reaching a two month high against the dollar. At 10:38 GMT, GBP/USD jumped 0.51% to 1.3413.
Reports suggested on Wednesday that Britain and the EU had agreed to a settlement of as much as £87 billion. The final net figure is rumoured to amount to around £40 billion, double the figure Prime Minister Theresa May suggested in her speech in Florence. The divorce bill still requires formal approval.
The news has boosted sterling as it should allow for Brexit talks to move on to the second phase of negotiations in December, allowing for both sides to discuss the future relationship. Until now, the uncertainty surrounding the UK position has rocked the currency.
Official data on Wednesday also showed the growth of net lending to individuals and households in the UK was at an 18-month low as household debt eases.
The Bank of England released data showing that consumer credit slowed to 9.6% in October, from September’s growth of 9.8%. The October increase is the slowest for 18 months, since April 2016.
Net lending to individuals increased by £4.8 billion in October. Analysts had predicted an increase of £4.3 billion. September’s figure was revised down to £5.2 billion, from £5.5 billion.
Both mortgage approvals and lending were down in October, missing the forecast figure. Mortgage approvals fell to 64,580 from 66,110 in September. The consensus figure was 65,000. Mortgage lending dropped to 3.39 billion in October, compared to 3.75 billion the month before. The forecast figure had been 3.60 billion.
M4 Money Supply increased by 0.6% in October, higher than the forecast 0.3%, and up from September -0.1%.
The dollar was lower against most major currencies on Wednesday following an upbeat Tuesday session. North Korea launched a more powerful intercontinental ballistic missile on Tuesday evening, and claims the missile has the capability of reaching the US mainland, as far as the east coast.
The US Senate Budget Committee approved President Donald Trump’s tax reform bill, meaning a full Senate vote could go ahead as early as Thursday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.05% at 93.15.
EUR/GBP dropped 0.38% to 0.8839, while EUR/USD edged up 0.07% to 1.1848.
Despite the missile threat from North Korea, sterling made gains against the safe haven currencies. GBP/JPY jumped 0.48% to 149.50, while GBP/CHF made similar gains to sit at 1.3194, an increase of 0.46%.
GBP/AUD pushed up 0.64% to 1.7685, while GBP/NZD was up 0.28% at 1.9390.
Sterling made most gains against the Canadian dollar, jumping 0.69% GBP/CAD was 1.7214.
Investors will be watching Brussels for further comment on Brexit progress. US growth figures will be released on Wednesday afternoon.