Euro jumps to near 2-month highs on Brexit deal

London

THE euro rallied to its highest levels in nearly two months against the dollar on Thursday after the European Union and Britain struck a Brexit deal just a few hours before the start of a summit of the bloc's leaders in Brussels, European Commission President Jean-Claude Juncker said.

However, sterling sank into losses in chaotic trade on fears that the deal might not win parliamentary approval, having earlier spiked close to US$1.30 on news of the agreement.

At about 1225 GMT, the pound was down 0.28 per cent against the dollar at US$1.2795.

The euro meanwhile rose 0.65 per cent to 86.85 pence.

"After the initial relief that the UK government and EU have done a deal, markets are worried that it still does not have enough support to get through parliament on Saturday," independent economist Julian Jessop told AFP.

The euro has struggled, falling more than 3 per cent so far this year, as a broader economic slowdown in Europe fuelled by the protracted trade war between Washington and China has hurt investor sentiment towards the single currency.

But hopes of a Brexit deal this week has dragged the euro out of a downtrend and pushed it above US$1.11 for the first time in a month.

"A move above US$1.1210... and the 200-day moving average is needed to boost confidence that a low is in place," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

On Thursday, the single currency briefly gained 0.5 per cent to US$1.1140 before trimming some gains to stand 0.4 per cent up at US$1.1112.

The euro's surge washed over into currencies that extended gains against the struggling dollar.

Against a basket of its rivals, the greenback fell 0.4 per cent to 97.496, its lowest since late August.

The dollar also suffered in early London trading due to weak US data.

US retail sales fell for the first time in seven months in September while a report from the US Federal Reserve described the economy's progress in cautious terms.

Elsewhere, the Norwegian crown weakened to an all-time low of 10.1800 against the euro.

Some analysts blamed the crown's recent weakness on global trade jitters, while others said the speed and magnitude of the drop were hard to explain.

The Australian dollar held near the day's highs, up 0.3 per cent against the dollar after jobs data showed buoyant hiring, lowering chances of monetary easing in November. REUTERS, AFP