Sterling surged on Monday as Britain and the European Union agreed to a 21-month post-Brexit transition period and a potential solution to avoid a “hard border” for Northern Ireland.
The pound, which had already been rallying on expectations for a transition deal, gained further after British Brexit minister David Davis and EU chief negotiator Michel Barnier announced an agreement.
Investors had largely expected Britain to secure an agreement at Thursday’s EU summit, but concern remained that a deadlock over the Irish border would derail a deal.
Against the dollar the pound rose as much as 1 percent to $1.4088, its strongest since Feb. 16 and the biggest one-day rise since January, before falling back. It was up 0.6 percent at $1.4031 at 16:00 GMT.
Versus the euro, sterling climbed as much as 0.8 percent to 87.455 pence per euro, its best level since Feb. 8.