UK and EU said to be close to draft legal text on Brexit

According to Bloomberg, which cited two persons with knowledge of the talks, the negotiators were said to be close to inking a draft deal.

However, the Prime Minister Boris Johnson would need to obtain the backing of his DUP allies.

Earlier, citing a UK official, Bloomberg had reported that Brussels had made some concessions as regards the risk of sub-standard goods entering the single market via the border with Northern Ireland.

And a French official was said to have described Westminster's latest proposal as "serious", with Johnson having held "constructive" talks with he French President, Emmanuel Macron, on Tuesday morning.

Both sides were said to be working towards agreeing a deal on Tuesday, which would allow EU leaders to scrutinise it before their 17-18 October summit and Parliament to vote on it on the following Saturday.

As of 1536 BST, the pound was climbing 0.94% to 1.1542, while against the US dollar it was changing hands at 1.27718 and up by 1.31% on the day, having topped its 200-day moving average for the first time since may May in the process, said Neil Wilson, chief market analyst at Markets.com.

"These kind of reports expose just how vulnerable sterling is to headline risk. At present these are unconfirmed reports and need to be verified – we just have BBG citing two people with knowledge of the talks," Wilson said.

"If a draft deal can be achieved we would expect another spike north to 1.30 on cable in very short order, and potentially 1.3170 could be targeted. It could get very choppy now.

"However, as we consistently stress, there is yet a lot to overcome even if a deal is agreed - most importantly Parliament would need to back the agreement and this is far from assured."