The pound is posting its biggest 2-day surge since since 2008 on Brexit deal hopes

Reuters

• The pound is surging after the EU agreed to enter Brexit "tunnel" negotiations with Boris Johnson, increasing the hopes of a deal.
• Earlier, Business Insider reported that Michel Barnier, the EU's chief negotiator, was given the go-ahead by member states to enter into detailed discussions with the UK government.
• The pound pushed up 1.3% against the dollar and 1% against the euro at Friday lunchtime.
• The spike in the pound was the biggest since December 2008.
• View Markets Insider's homepage for more stories.

The British pound is surging on Friday, as the hopes of a Brexit deal were raised after the EU signaled it was ready for "tunnel" negotiations with Britain.

The UK prime minister, Boris Johnson, is now set to meet the EU's chief Brexit negotiator, Michel Barnier, for high-level talks, after EU ambassadors from member states gave the go-ahead for further talks.

Following the news, the pound rallied 1.3% against the dollar on Friday at 1:30 pm in London, (8:30 am EST) and 1% against the euro.

This was the largest two-day spike against the dollar since December 2008.

Business Insider reported earlier that the tunnel negotiations is a term used to describe high-level talks led by small teams between the EU and UK which are conducted in complete secrecy.

Boris Johnson and his team will now meet with Michel Barnier and the EU for talks.

Read More: The EU agrees to enter Brexit 'tunnel' negotiations with Boris Johnson as hopes of a new deal surge

On Thursday, the pound rallied 0.7% against the dollar after talks between Boris Johnson and the Irish leader, Leo Varadkar went well and provided a "pathway" for future talks.

Traders, however, are remaining cautious, given Brexit negotiations could yet unravel. "The risks for no-deal still remain, but these constructive developments are having many traders abandon short-term bets," said Edward Moya, senior market analyst at Oanda.

Donald Tusk, the president of the EU council earlier tweeted a similar sentiment. "The UK has still not come forward with a workable, realistic proposal." He added, "But I have received promising signals from Taoiseach @LeoVaradkar [Irish leader] that a deal is possible. Even the slightest chance must be used. A no deal #Brexit will never be the choice of the EU."

Markets Insider

The pound against the dollar in the last three months.