Connor Campbell, financial analyst
at financial spread betting firm Spreadex, observes: "The German leader said the UK has until October 31st
to find a solution to the Irish backstop conundrum, a phrasing that has been
seen as more conciliatory - however imperceptibly - than the ‘find a solution
in the next 30 days’ comments from Wednesday.
"Reacting as if there had been actual progress made, the
pound showed its desperation for good news as it leapt around 1% against both
the dollar and euro."
Pound jumps on Merkel comments
The pound jumped more
than half a cent on Thursday to nearly a one-month high against the US dollar after
German Chancellor Angela Merkel said a solution to the Irish
border issue could be found before the 31 October Brexit deadline.
Sterling, trading around $1.2160 earlier, shot as high as $1.2265, before settling around $1.2217, up 0.8%
on the day.
Against the euro, the pound rose as high as 90.415 pence
, a more than 1% rise on the day and its highest
since July 29.
Sterling edges higher
The pound has edged higher today, although traders are keeping a close eye on Boris Johnson's Brexit talks with European leaders.
Against the dollar, sterling is currently up 0.3% at $1.2164, while against the euro it is also 0.3% higher, at €1.0971.
No-deal Brexit fears weigh on pound
The pound continued to trade lower against the dollar and the euro amid fears about a no-deal Brexit.
The pound fell 0.31% against the dollar to $1.2090. It dropped 0.33% on the euro to €1.0911.
Mr Johnson is set to meet with German Chancellor Angela Merkel tomorrow and France's President Emmanuel Macron on Thursday before world leaders gather at the G7 summit in Biarritz at the weekend.
Elsa Lignos, analyst at RBS Capital Markets, forecasts that sterling could recover.
"We are tactically long [on] GBP in our trade of the week as we feel there is some short term risk of a bounce if this week's talks are not as bad as feared," she says.
Pound slides on the dollar and the euro
The pound is down 0.24% against the dollar at $1.2119. Sterling is also trading 0.31% lower against the euro at €1.0917.
It is a key week for Boris Johnson who will meet with German Chancellor Angela Merkel and French President Emmanuel Macron on Wednesday and Thursday respectively in the UK Prime Minister's first overseas meetings since his appointment.
He is expected to tell them that there needs to be a new Brexit deal. The UK is now 10 weeks away from the departure date on 31 October.
It comes ahead of the G7 Summit in Biarritz at the weekend.
Marshall Gittler, a strategist at ACLS Global, says: "I expect the pound to be increasingly volatile as the
deadline approaches and more and more desperate measures get
considered in public and probably even tried in real life.
"Hopes that something will be found to prevent a no-deal
Brexit will send the pound up, as they did on Friday, but then the
currency will come back down once it's realised that those hopes
Sterling was also up against the euro, up 0.67% at €1.0964.
Marshall Gittler, chief
strategist at ACLS Global, says: "This suggests consumer spending is still holding up and
still supporting the economy even though overall output
contracted in the second quarter.
Brexit uncertainty isn't just affecting British companies - it's also hitting events.
The London Film and Comic Con (LFCC) has announced that it is cancelling its winter event, which was set to take place in late November.
The fan convention, which is well known for flying popular US actors from sci-fi fantasy films and TV series to the UK for fan autograph sessions, says that it has been affected by the weakness of the pound.
"Running our larger events we are very dependent on the pound to the dollar exchange rate and recently the pound dived to its lowest rate in decades, which means that most US guests' costs have risen dramatically and this looks likely to stay this way until we all find out where we stand with Brexit in the coming months," Jason Joiner, the managing director of LFCC owner Showmasters wrote in a Facebook post to event attendees.
"This is a decision we have properly thought through and we do feel with all this uncertainty in the world and with the exchange rate fluctuation these issues are unlikely to stabilise before the Brexit outcome in October, and most likely until the end of the year."
LFCC said that it will automatically issue refunds on tickets for the winter convention that have already been purchased.