The pound surged as the British government said it had secured changes to its divorce deal from the European Union and planned to hold a vote in the UK parliament.
Sterling climbed as much as 1.1% in Asia-Pacific trading Tuesday after climbing more than 1% the previous day amid optimism over Brexit.
“The situation is very fluid but the market is perceiving hard Brexit scenarios as increasingly unlikely,” said Vassili Serebriakov, a macro strategist at UBS Securities in New York.
UK Prime Minister Theresa May has secured “legally binding changes” that “strengthen and improve” the Brexit deal, her deputy David Lidington told lawmakers late on Monday in London. He said the government has secured changes to the withdrawal agreement and political declaration on the future UK-EU partnership and that negotiations were ongoing in Strasbourg, France.
For now, markets seem to take it positively that there is a possibility of result other than a delay and that’s spurring short-covering, with people squaring positions,” said Shinsuke Kajita, chief strategist at Resona Holdings.