LONDON (Reuters) – The pound sterling rose against the dollar and the euro on Friday after it was revealed that UK Prime Minister Boris Johnson’s top advisor and Brexit mastermind Dominic Cummings will leave the company amid talks of a trade deal are at stake with the European Union.
Negotiations are expected to miss another deadline of mid-November and continue until next week, before a potentially decisive meeting of European heads of state and government takes place next Thursday.
Analysts suggested that the departure of Cummings, who drove the 2016 referendum campaign for Brexit and will leave his position on Downing Street when the transition period ends, could result in a less harsh approach to talks with Brussels.
“With Cummings being seen as one of the key figures behind Brexit, this certainly suggests that Johnson might consider more compromises, which is seen as pound-positive. This is probably how the market is picking up this news, ”said Lee Hardman, currency analyst at MUFG.
The pound sterling gained around a third percent against the dollar and 0.3 percent in early trading against the euro.
Sterling lost ground on Thursday due to Brexit jitter and news that the UK economy had grown 1.1% more slowly than expected in September from August.
“The Brexit negotiations are getting on the wire. Next week will be a more important point, although as we’ve seen those deadlines may be postponed, ”added Hardman.
“We expect to get a deal by the end of the year that could improve market sentiment. But even if we get a trade deal, it might be limited. You could see the pound only hit $ 1.35, $ 1.36. “
Reporting from Iain Withers; Arrangement by Toby Chopra