The pound rose on Tuesday amid hopes that British Prime Minister Boris Johnson would strike a Brexit deal at an EU summit this week to avert a chaotic exit on October 31.
As of 08:06 GMT, the British pound surged against the U.S dollar by 0.38 percent at $1.2663. The highest level recorded during the session was at $1.2697, close to the highest level in three months. Against the euro, the British currency rose 0.45 percent at 1.1478.
The rise was the result of cautious optimism about the Brexit talks, and the Brexit deal appears to be taking shape after sources on both sides said a positive day of negotiations had resulted in a possible solution to the Northern Irish border problem.
The focus of the talks has shifted as representatives of the European Union and the British side are due to meet for a final summit on Thursday and Friday that will determine the course of Brexit.
British Prime Minister Boris Johnson wants an exit deal to have an orderly Brexit before the October 31 deadline.
On the contrary, the Prime Minister of Finland, Antti Rinne, who holds the rotating presidency of the European Union, said at a press conference on Monday that he believed that "there is no time in a practical or legal way to find an agreement before the meeting of the Council of the European Union. We need more time."
While the Irish Foreign Minister Simon Coveney was in Brussels on Monday and strongly hinted that, more time was needed to negotiate.
Besides other EU diplomats have indicated that they are pessimistic about Johnson's proposed border solution and want more concessions besides the prevailing conviction of some of them that these issues need a longer time.
However, the pound snapped some of its earlier gains after a report showing deceleration in U.K. wage growth and rise in unemployment rate from record low.
including bonuses rose 3.8 percent in the quarter ended August from a year
earlier from a downwardly revised of 3.9 percent, while the jobless rate surged
to 3.9 percent during the same period, compared to a previous of 3.8, which was
the lowest level since January 1975.