Pound has best two days in more than a decade as hopes of Brexit deal rise

Traders sent the pound surging on its best 48 hours for more than a decade as hopes of a Brexit breakthrough sparked bets the UK economy will roar back into life.

Sterling jumped to a three-and-a-half month high against the US dollar on Friday evening, climbing 2.51pc to above  $1.27 late on Friday. It has now rallied more than 4pc since Thursday morning, notching up the biggest increase since 2009.

Against the euro, the currency surged 1.86pc to nearly €1.146 on Friday - its biggest one-day rise since July 2016.

It came on a day of frantic market activity, with investors piling back into stocks which have been unloved since the Brexit vote three years ago.

Some of Britain's biggest banks and builders notched up double-digit percentage gains amid a buying frenzy because they are expected to benefit if the economy picks up following a Brexit deal.

The optimism was driven by a successful meeting between Prime Minister Boris Johnson and Irish Taoiseach Leo Varadkar which suggested an agreement is finally in sight.

UK and EU negotiators are now working towards into intensive confidential negotiations before a crunch summit on October 17, in a process known as "entering the tunnel".