Pound Rises On Report Of EU Concession To Revoke Backstop

The pound advanced against its major counterparts in early European deals on Wednesday, following a media report that the European Union has indicated willingness to grant Prime Minister Boris Johnson a major concession to Irish backstop on Brexit deal.

The Times reported that the EU is prepared to make a major concession on a Brexit deal by providing a mechanism for the Northern Irish assembly to leave a new Irish backstop after a set number of years.

European governments have agreed to a unilateral revocation of the withdrawal treaty by Stormont after a period of time.

The date of 2025 has been mentioned, if both communities in the conflicted province accept, it added.

Meanwhile, Britain's government is set to call MPs to a special sitting of parliament later this month to decide the future direction of Brexit.

European shares rose as bargain hunters stepped in after steep losses the previous day.

While focus shifted to corporate earnings, underlying sentiment remained cautious amid heightened tensions between the United States and China ahead of crucial talks set to begin on Thursday.

The pound rose to 0.8938 against the euro, after falling to 0.8986 at 2:45 am ET. On the upside, 0.88 is possibly seen as the next resistance level for the pound.

The pound appreciated to 1.2292 versus the dollar, from a low of 1.2198 seen at 2:45 am ET. Next immediate resistance for the pound is seen around the 1.26 level.

Reversing from its early lows of 130.65 against the yen and 1.2122 against the franc, the pound gained to 131.82 and 1.2200, respectively. The pound is seen facing resistance around 134.00 against the yen and 1.25 against the franc.

Looking ahead, U.S. wholesale inventories for August are due in the New York session.

At 2:00 pm ET, the Federal Reserve releases minutes from the September 17-18 meeting.