Pound Climbs After U.K, EU Agree On Draft Deal For Future Relationship

The pound drifted higher against its major opponents in the European session on Thursday, after news that the U.K. and the European Union agreed on a draft agreement on their future relationship ahead of the EU summit on Sunday.

The draft declaration envisages to have "a trading relationship on goods that is as close as possible" following Brexit.

The declaration stated that the UK and EU "agree to develop an ambitious, wide-ranging and balanced economic partnership."

The draft statement outlines the structure for the future U.K.-E.U. relationship, which will be fully negotiated after the Britain formally leaves on March 29, 2019.

"I have just sent to EU27 a draft political declaration on the future relationship between EU and UK," European Council President Donald Tusk said in a tweet. "The Commission president has informed me that it has been agreed at negotiators' level and agreed in principle at political level, subject to the endorsement of the leaders."

The currency was also buoyed by a falling dollar, which weakened for a second straight session amid the Thanksgiving holiday in the U.S.

The currency traded mixed against its major opponents in the Asian session. While it rose against the greenback and the yen, it held steady against the euro and the franc.

The pound climbed to weekly highs of 1.2927 versus the dollar and 145.94 against the yen, off its early lows of 1.2768 and 144.26, respectively. If the pound rises further, 1.32 and 147.00 are likely seen as its next resistance levels versus the dollar and the yen.

The U.K. currency appreciated to a 6-day high of 0.8841 against the euro and a 3-day high of 1.2834 against the Swiss franc, reversing from its early low of 0.8923 and near a 2-month low of 1.2691, respectively. The next possible resistance for the pound is seen around 0.87 against the euro and 1.31 against the Swiss franc.

Looking ahead, the Bank of Canada Senior Deputy Governor Carolyn Wilkins will participate in a panel discussion titled "2-Balancing act: How governments can manage systemic risks and maintain healthy housing markets" at the Canada Mortgage and Housing Corporation in Ottawa at 9:45 am ET.

At 10:00 am ET, Eurozone flash consumer sentiment index for November will be out.