LONDON (Reuters) - Sterling jumped above $1.28 on Wednesday after a reporter for Irish broadcaster RTE, citing European Union sources, said the main stumbling block to a Brexit deal had been removed.
The pound, down before the report, surged as much as 0.4% to $1.2840 GBP=D3, a new five-month high. Against the euro sterling rose to 85.985 pence EURGBP=D3.
British government bond futures gave up their gains and UK domestically-exposed stocks cut their losses after the RTE report.
According to the reporter, the Northern Irish Democratic Unionist Party, which props up the British Conservative Party in the UK parliament, had accepted the latest proposals for a Brexit deal between London and Brussels.
The positive news sparked selling in safe-haven government bond markets, with Germany’s 10-year bond yield rising to its highest in around 2-1/2 months a -0.397% DE10YT=RR.
British 10-year government bond yields GB10YT=RR were broadly flat on the day at 0.69% after prices fell back.
Reporting by the London Markets Team; Editing by Tommy Wilkes