November 28, 2017 / 6:20 PM / a year ago

Sterling rallies on newspaper report of Brexit bill settlement

FILE PHOTO - British Pound Sterling banknotes are seen at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger

LONDON (Reuters) - Sterling briefly rallied more than a percent from its lows in on Tuesday after The Daily Telegraph newspaper reported that Britain and the European Union had agreed on the Brexit divorce bill, citing unidentified sources.

The currency gave up some of its gains after a British government official cast doubt on the newspaper report, but traders said the news offered some support to the struggling currency.

“This puts a floor under the pound for now, and while this is not a game-changer for sterling investors, it is an incrementally positive step,” said Viraj Patel, an FX strategist at ING Bank in London.

Before the report, the British pound was trading as much as 0.7 percent down on the day at $1.3221 against the dollar. It had reversed all of those losses by 1800 GMT and rose as high as $1.3371 after the news in New York trading.

From the day’s lows to the highs, it had a trading range of more than a percent, a big move for even sterling, which has become increasingly volatile in recent sessions.

Against the euro, it rose 0.4 percent against the euro to stand above the 89 pence level.

Concerns over stalled Brexit negotiations had weighed on the British pound in recent weeks [GBP/].

The Telegraph reported the UK and EU had reached an agreement in principle over the EU’s long-standing demand for progress on a financial settlement before substantive trade talks could begin. It said the final bill was being deliberately left open to interpretation but would be 45 billion to 55 billion euros (40.2 billion pounds to 49.1 billion pounds).

But a British government official, who declined to be named, said he “did not recognise this account of the negotiations”.

Reporting by Saikat Chatterjee, editing by Larry King; Edited by Mike Dolan

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