FX round-up: Pound gains amid reports 'Malthouse Compromise' might be dead

Sterling jumped on Tuesday, amid conflicting reports regarding the death of the so-called 'Malthouse Compromise' which called for the Irish backstop to be renegotiated or, failing that, for an orderly 'no deal' withdrawal.

Roughly a half hour before the close of share trading in London, reports posted to social media indicated that the above compromise was no longer considered an option.

Yet a spokesman for Downing Street later dismissed those reports, telling Reuters: "The way you're presenting it to me [...] I wouldn't represent it the way you are to me."

Against that backdrop, as of 1847 GMT, the pound was up by 1.02% to 1.30596 versus the Greenback, while in the background the US dollar spot index was shedding 0.44% to 96.4780.

To take note of as well, other previous media reports had suggested that progress had been made in the the Bexit talks between Westminster and Brussels on Monday.

The Prime Minister was due to travel to Brussels the next day to meet with European Commission President, Jean Claude Juncker.

Euro/dollar was also a tad higher, possibly on the back of a slightly better than expected reading on the ZEW Institute's closely-followed index of analysts' confidence in Germany.

The institute's economic sentiment index rose by 1.6 points to -13.4 for February, even as a sub-index linked to financial market experts' view of the present state-of-play dropped by 12.6 points to 15.0.

February's reading was also well below the gauge's long-term average value of 22.4 and a rapid bounce-back was not on the cards, according to the ZEW.

"At the moment, we do not expect a rapid recovery of the slowing German economy. The economic situation in Germany has been weak, especially in the manufacturing sector [...] incoming orders are stagnant and foreign trade currently provides no fresh impulses," ZEW President, Professor Achim Wambach, said.

Dollar/yen on the other hand was flat at 110.60, having erased an earlier advance after what some market commentary described as 'dovish' remarks by Bank of Japan Governor, Haruhiko Kuroda, overnight.

In response to a question from a lawmaker in Parliament, Kuroda said the BoJ might be forced to consider easing monetary policy further if a stronger yen impacted on the outlook for inflation and the economy.