Spanish economy minister Luis de Guindos and his Dutch equivalent Wopke Hoekstra met throughout the week to discuss their Brexit positions as both nations became concerned about the potential impact from higher tariffs and the implications of any agreement for the European Union budget, Bloomberg reported. The Pound hit a 2-week trough against the US Dollar earlier, and analysts are expecting more losses ahead, pointing to weak fundamentals as the culprit for Sterling weakness.
The pound has surged to its highest value against the dollar since the Brexit vote after reports that Spain and the Netherlands are prepared to back a soft Brexit deal.
The currency had been trading at about $1.50 before the result of the referendum became clear.
Citing a person familiar with the matter, Bloomberg said that Spanish economy minister Luis de Guindos and his Dutch counterpart Wopke Hoekstra had met earlier in the week to discuss Brexit.
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"Both have close trade and investment ties and are concerned about the impact of tariffs".
However, while the two finance heads reiterated the importance of British ties for both countries, and agreed to look out for each other's shared interests they also offered their full support to Michel Barnier with negotiations, a Spanish economy ministry official said. "It's not so significant as the rally would suggest".
Analysts said the rise in pound had been driven by the weakness in the dollar. Just because two of the 27 members say this, it doesn't mean a softer Brexit will happen. "I doubt it's as straightforward as that", he said.
Nonetheless, the news quickly rocketed the Pound to trade over 1% higher against the Australian Dollar as the trading week drew to a close.