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UPDATE 1-Pound buoyed by Juncker's comments on possible Brexit deal

Fri, 20th Sep 2019 10:14

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv(Updates prices, adds chart)

LONDON, Sept 20 (Reuters) - The British pound pulled backfrom a two-month high and fell on Friday after Irish ForeignMinister said that London and the European Union were not yetclose to a Brexit deal.

A report in the Financial Times that British Prime MinisterBoris Johnson had told colleagues he did not expect to be ableto reach full "legally operable" deal covering the Irish borderat a meeting of EU leaders also weighed on sterling.

The losses came after a rally overnight following EuropeanCommission President Jean-Claude Juncker saying that agreementon a Brexit deal with the United Kingdom was stillpossible.

Johnson has vowed to take his country out of the EU on Oct.31, with or without a deal, but UK lawmakers have voted to forcehim to seek a delay to the departure if he cannot strike a newagreement with Brussels.

The British government has since stepped up efforts to tryand renegotiate the deal agreed by previous Prime MinisterTheresa May but repeatedly rejected by Britain's parliament.

Ireland's foreign minister said the "mood music" hadimproved but London and Brussels were still a long way fromclinching a new deal.

Sterling dropped 0.4% to $1.2463 after earlierhitting a two-month high of $1.2582.

Against the euro, sterling weakened from a four-month peakand was last down 0.3% at 88.35 pence.

Friday's falls come in the context of a British currencythat has risen from $1.20 in less than three weeks, as investorsslashed their bets against the pound because of perceivedreceding risks of a no-deal Brexit.

"Should Juncker's perceived optimism over a Brexit deal befound wanting and the UK-EU impasse become evident once again,the pound may very easily unwind recent gains and falter backtowards the 1.20 mark against the dollar," said Han Tan, ananalyst at FXTM.

(Reporting by Saikat Chatterjee and Tommy Wilkes; Editing byPravin Char and Toby Chopra)

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