The pound hit a two-month Wednesday after reports that the U.K. is moving closer to agreeing a financial settlement over Brexit, which would allow talks to move onto a future trade deal with the European Union.
The pound hit a high of $1.3441 in Wednesday trading, the highest since Sept. 29. The currency was up 0.48% against the dollar by 09:30 London time and changing hands at $1.3413.
Prime Minister Theresa May is expected to present to the settlement terms, which could be around €60 billion ($71 billion), to EU member states next week, if an agreement can be reached on other issues including EU citizens' rights and a possible border between Northern Ireland and the Republic of Ireland, the Financial Times reported, citing people familiar with the situation.
The leaders of the remaining EU 27 member states will have to decide to accept the offer or not, which is expected to take place in mid-December.
The EU gave the U.K. a deadline of Monday, Dec. 4, to make significant progress on three key elements - financial obligations, citizens' rights and the Irish border -- if EU leaders were to give a green light at a summit on Dec. 14-15.
"I hope I can report to the European Council that in the meeting we have been able to negotiate that deal -- and that we have reached a very important step in our relations, if we find this very important point in the agreement in the next days," the EU's chief negotiator Michel Barnier told a conference in Berlin.
In her now well-cited "Florence Speech" in September May offered to cover around two years of transition payments, about €20 billion in net terms, and said that other commitments would be met.
The U.K. is working hard to move the discussions on to the future trade deal with the bloc, but EU negotiators have said that hold-up on any element of the current negotiations mean the talks would unlikely move on.
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