The British pound has surged higher in today’s trading session on the back of rumors that a deal between the UK and the EU has been done regarding the financial services industry.

The sterling was also boosted by a letter written by U.K. Brexit Secretary Dominic Raab, who wrote that a deal on Brexit with the EU was not far away.

Mr Raab believes the deal will be completed by November 21st which sent a wave of enthusiasm through the market

“The good news is Raab is happy to pencil in a date he believes he’ll have a deal done by,” said strategist Jordan Rochester from Nomura International Plc.

“The bad news is that politics is flexible and this is no solid confirmation of that. But the market had grown very pessimistic on a deal being done this month and the noises today will serve them a reminder that a deal can be close at hand.” He added.

This week’s interest rate decision from the Bank of England, where rates are set to remain unchanged, is not expected to create any major volatility in the pound and if there is any movement, it’s likely to be to the downside as BOE governor Mark Carne expresses his concerns over the fallout from Brexit.

There is real concern now that if an agreement is not reached soon with the EU, Britain could fall into recession.

"UK is still no closer to an agreement. They are beyond the critical period of negotiations which means BoE governor Mark Carney will be even more worried about the downside risks," said Kathy Lien of BK Asset Management.

"As a result, traders cannot count on the central bank to rescue the pound because they've made it clear that the outlook for the UK economy hinges on Brexit negotiations." She added.