Weekend risks flip to the upside
There was a time when no one wanted to own the pound ahead of the weekend due to the endless Brexit risks. Now the risks are to the upside on reports that Cabinet ministers believe a delay to the March 29 Brexit deadline are increasingly likely.
Theresa May's office denied it but the market senses an impasse and a delay one way or another. That's why the pound is finishing the week with such strength. The thinking is that a deal could come on the weekend and lead to a gap higher before the open on Sunday.
I'd argue that most of today's move in the pound is a result of Brexit hopes but a better question is how much of those hopes will be reversed if there's no news on the weekend and May remains determined to put it to a vote? There's no way of knowing but I'd suspect it's about half.
Cable looks to be breaking above the late-December highs and there is a decided sense of optimism creeping in. That could dissolve in a flash if a political crisis emerges.