The pound has hit a two-month high on Brexit bill reports

Courtney Goldsmith
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The UK and EU have reportedly agreed to a divorce bill (Source: Getty)

The pound has risen to a two-month high on reports the UK and EU have reached an agreement on the Brexit bill.

Sterling reached a high of 1.3431 earlier this morning against the US dollar.

"The positive reaction seen in the pound following the news that the UK would pay its EU liabilities may seem a little counterintuitive at first but the expected progress this will allow in the discussions going forward appears to have outweighed the financial cost which is said to be worth around €100bn. This figure simply reflects the payments from the UK to the EU and doesn’t account for the money received back, with net payments forecast to be around half that amount," said David Cheetham, chief market analyst at XTB.

"The decision to bow to EU demands has removed one of the biggest obstacles to the divorce settlement and if citizens rights, and the contentious question surrounding what to do with the border between Northern Ireland and the Republic can be resolved promptly then talks can hopefully progress to future trade relations."

Read more: Brexit breakthrough on the cards as ministers reveal talks "momentum"

(Source: Bloomberg)

Last night, the government revealed “recent momentum” in Brexit talks amid reports both sides had already agreed a multi-billion euro divorce bill.

Meanwhile, Berenberg raised its GDP growth forecasts for the UK as the risk of a hard Brexit fell to 20 per cent from 30 per cent previously.

Berenberg lifted its 2018 and 2019 forecasts to 1.8 per cent and 1.9 per cent respectively, from 1.6 per cent and 1.7 per cent.

"With the UK ready to honour its full commitments in the Brexit bill, and a good chance that London and Dublin can strike a compromise on the Irish border question soon, we now see a lower risk that the UK and the EU will part company without a future trade deal by the March 2019 Brexit deadline," said Berenberg's senior UK economist, Kallum Pickering.

Read more: David Davis risks contempt of parliament over Brexit impact reports

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