Investing.com - Sterling moved higher against most major currencies on Friday as Prime Minister Theresa May showed the first indications of a “soft” Brexit, as talks on the UK's exit from the EU moved into their second day in Brussels.
GBP/USD was 1.2731 at 10.00 BST, up 0.39% from the previous session close of 1.2682.
May told reporters on Friday morning that the UK would offer EU citizens currently living legally in Britain the right to remain, on the condition that the same rights be granted to UK citizens currently living in the EU.
May said those EU citizens having lived in the UK for longer than five years would be able to keep the rights they currently hold. In response to criticism from the opposition that the plan was too vague, the Prime Minister said more details will be released on Monday.
The pound dropped on Tuesday following BoE Governor Mark Carney’s dovish comments in his Mansion House speech that he would not raise interest rates this year.
On Wednesday, MPC member Andy Haldane contradicted Carney’s comments when he indicated that he would consider voting for a rate hike later in the year. On Thursday Kirstin Forbes, the outgoing hawkish member of the MPC, further stressed the need for an interest rate hike.
The US dollar Index, which measures the strength of the dollar against a trade-weighted basket of six major currencies was down 0.16% at 97.10 from an open of 97.25. The day’s low was 96.95.
Following mixed economic data from the euro-zone on Friday morning, EUR/GBP was down 0.23% at 0.8772.
Eurozone services PMI data showed that business growth did not perform as expected in May. The reading of 54.7 was down from April’s 56.3 and lower than the forecast 56.2.
Sterling performed well against safe haven currencies on Friday morning. GBP/JPY was up 0.25% at 141.54.
The pound showed similar gains against the Swiss Franc, GBP/CHF was 1.2355, up 0.24%.
Against the Canadian Dollar, the pound was up 0.23%, GBP/CAD was 1.6819 on Friday morning. Other commodity currencies, GBP/NZD and GBP/AUD were largely flat.
Investors will be watching the Brexit proceedings in Brussels and to see whether the Democratic Unionist Party (DUP) makes a deal with the minority Conservative government, to strengthen the government’s position during the Brexit talks and in parliament.
The data to watch next week will be revised Q1 GDP for the UK and the US.