Friday, accompanied by the hopes that the Brexit will soon occur under a smooth and transitional deal soon, the British pound sterling was boosted and touched its 10-month high against the United States dollar. The British pound sterling rose up by 0.4% at $1.3125, which is an inch from their $1.3159 touch on Thursday.
In accordance to this, Lee Hardman currency economist of MUFG—who expects the pound to have recovered to around $1.40 by the second quarter of 2018, claimed on Friday that a transitional deal could possibly increase the chance of a smoother Brexit, in which they think could supportive of a stronger British pound sterling.
However, Lee Hardman also mentioned that at this point, given the potential drawbacks and struggles that might come along the way, the market is not willing to buy into that scenario. In addition, Viraj Patel, currency strategist at ING sad that the European Union would have to agree to such a deal before investors and traders began to price it in, as well as for the currency to rally further.
Patel also added that United Kingdom is moving towards a center ground on Brexit, however, they need to see what the European Union are willing to offer. As they need some agreement before the markets starts pricing in.
On the other hand, with regards to the Brexit discussions, the European Commission announced on Friday that a potential Brexit transition period could only begin once divorce issues were settled.