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Pound Higher On Brexit Deal Hopes

The pound drifted higher against its key counterparts in early European deals on Wednesday, following a media report that the U.K. is likely to reach a Brexit deal with the European Union shortly.

Britain's ITV News reported late Tuesday that a deal on a Brexit withdrawal agreement could be reached at the EU council next week, if the U.K. and the EU agree on Irish border issue.

Substantial progress in talks have been made on contentious Irish border "backstop," the report said, adding that the EU appeared close to agreeing that the backstop would apply to the whole UK, instead of N. Ireland alone - or at least it would apply to the whole UK for customs.

Data from the Office for National Statistics showed that the UK economy logged a flat growth in August as the increase in industrial production was offset by contraction in construction and farm sectors.

Gross domestic product remained unchanged after expanding 0.4 percent in July. GDP was forecast to climb 0.2 percent.

Separate data showed that industrial production grew 0.2 percent in August but slower than the 0.4 percent increase seen a month ago. Meanwhile, manufacturing output shrank 0.2 percent after showing nil growth.

On a yearly basis, both industrial and manufacturing output grew 1.3 percent each. Economists had forecast industrial output to climb 1 percent and manufacturing to grow 1.1 percent.

The currency has been trading in a positive territory against its major opponents in the Asian session.

The pound advanced to a 2-day high of 149.09 against the yen and a 2-week high of 1.3185 against the dollar, reversing from its early lows of 148.37 and 1.3134, respectively. The pound is poised to find resistance around 150.00 against the yen and 1.33 against the dollar.

The pound hit a 2-1/2-month high of 1.3071 against the franc, from a low of 1.3021 hit at 5:00 pm ET. The pound is seen finding resistance around the 1.32 level.

The pound appreciated to 0.8723 against the euro, its strongest since June 15. This may be compared to a low of 0.8750 hit at 9:00 pm ET. If the pound rises further, 0.86 is likely seen as its next resistance level.

Looking ahead, Canada building permits for August, U.S. producer price index for September and wholesale inventories for August are set for release in the New York session.

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