The pound is poised for its biggest weekly rise in a month against the dollar as investors became cautiously optimistic that Britain would strike a deal at a summit next week over a transition period for its EU exit.
While sticking points remain such as a deadlock over the Irish border issue and recent headlines from senior officials have highlighted that differences remain, businesses have raised hopes the bloc’s leaders can endorse a transition at a Brussels summit on Friday.
If we get an open-ended transition deal that would help boost Sterling as there would be less chance of a hard Brexit.
In other major developments next week, the Bank of England is set to announce a policy decision which may shed some light on the future path of interest rates. Markets are now pricing in about 36 basis points of rate hikes over the year.
Next week we also have the inflation and wage data from the UK on Tuesday and Wednesday.