Spanish and Dutch Agree to Seek Soft Brexit Deal

Spanish and Dutch Agree to Seek Soft Brexit Deal

Net long bets on sterling are already near their highest levels in more than three years, according to data released by the U.S. Commodity Futures Trading Commission on Friday.

Spanish economy minister Luis de Guindos and his Dutch equivalent Wopke Hoekstra met throughout the week to discuss their Brexit positions as both nations became concerned about the potential impact from higher tariffs and the implications of any agreement for the European Union budget, Bloomberg reported.

The pound climbed against a host of other majors on Friday, including the euro (GBP/EUR) and US dollar (GBP/USD).

Spain's economy ministry also denied the report.

While investors have warmed up to the bullish sterling theme against the dollar in recent weeks on expectations renewed of weakness in the USA currency, sterling bets against the euro have been far more cautious. The first phase of discussions between the Christian Democratic Union and the Social Democrats has gone well, inspiring investors and allowing the single currency to reach highs of 1.2154 versus the buck.


Mizuho analyst Neil Jones said the Bloomberg report, if true, was less significant than the sterling rally suggested.

"I'm sceptical this is necessarily a game-changer at this stage as there will also be member states pushing the other way", he said.

Neil Wilson at ETX Capital said: "Although the comments came from just two ministers who don't necessarily speak for the Barnier team as such, there is a sense that the direction of travel for the United Kingdom with regards Brexit is a lot more positive than it was prior to December".

The pound has surged to its highest value against the dollar since the Brexit vote after reports that Spain and the Netherlands are prepared to back a soft deal.

"Sterling is benefiting from the dollar weakness and the growing euro strength rather any pound-specific factors, which if anything have been underwhelming this week", said Alvin Tan at Societe Generale.

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