The British pound rose strongly against the dollar on Wednesday, galvanized by the announcement of the reopening of the border between the United Kingdom and France and the hope of a post-Brexit trade agreement between London and Brussels.

Around 10:20 a.m. GMT (11:20 a.m. in Paris), the pound gained 0.54% against the dollar, at 1.3433 dollars for one pound, and 0.27% against the euro, at 90.79 pence for one euro, regaining much of the ground lost earlier in the week.

The port of Dover reopened overnight from Tuesday to Wednesday, loosening the sanitary cordon that has surrounded the United Kingdom since the discovery of a new strain of the coronavirus.

“All the regulations will be manageable, as long as a no-deal does not reinforce these temporary tensions”, estimates Derek Halpenny, analyst at MUFG, who underlines that the forex traders have regained hope that an agreement would be reached before Christmas.

A European source said on Tuesday that "progress has been made" in the discussions, even if the subject of fishing remains a point of disagreement.

“We will have to be wary of conflicting headlines which could send the pound rocking until a definitive answer (on the agreement) has been given”, warns Hussein Sayed, analyst at FXTM.

According to the analyst, the British currency has more downside potential in the event of a no deal than upside in the event of an agreement.

Across the Atlantic, President Donald Trump rejected on Tuesday evening the recovery plan of some 900 billion dollars adopted the day before by Congress.

“For now, the market seems to be stalling while waiting for the situation to clear up,” commented Jeffrey Halley, analyst at Oanda.