Pound advances as top Brexiteer revives hopes for PM’s deal

Bloomberg

The pound climbed as Brexiteer Jacob Rees-Mogg signalled he could back the UK Prime Minister’s deal to leave the European Union, as he kept alive the possibility that her plan might pass through parliament, which did not.
Sterling reversed earlier declines to lead gains across the Group-of-10 currencies as Rees-Mogg said Theresa May’s deal was “better than not leaving at all.” Rees-Mogg leads an influential grouping of lawmakers, the European Research Group, who have opposed her Brexit strategy so far.
“The ERG may capitulate and that might see meaningful vote three back in play,” said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce. “The risks of the ERG attempting to encourage the government over the cliff edge have diminished, alternatively the probability of a soft Brexit has increased.”
Sterling gained 0.3 percent to $1.3237 in London, after earlier falling as much as 0.3 percent.
The currency strengthened 0.2 percent to 85.58 pence per euro, while the yield on UK 10-year government bonds gained three basis points to 1.01 percent.
The move in the pound may have been exacerbated by thin trading, with options volumes at 75 percent of recent averages, according to data from the Depository Trust & Clearing Corp. The drop to the day’s low led some long positions to be stopped out, triggering fresh buying on the Rees-Mogg headlines, said a trader in Europe who asked not to be identified because they are not authorised to speak publicly.
Parliament remains deadlocked with just weeks remaining until a new deadline to leave the EU. Lawmakers are set to vote on a series of different options on Wednesday, including reversing Brexit and holding a second referendum.