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Sterling jumps after Britain, EU agree on draft declaration for future ties

FILE PHOTO: Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger

LONDON (Reuters) - Sterling jumped on Thursday after the European Commision and Britain agreed on a draft text for future EU-UK ties following their divorce.

The pound rose nearly one percent to hit a day's high of $1.2894 after the agreed draft declaration stated that parties have "a trading relationship on goods that is as close as possible."

Sterling also jumped half a percent versus the euro to hit a day's high of 88.70 pence.

British government bond futures dropped around 20 ticks, last at 122.80.

The UK's FTSE 100 hit a session low as sterling rallied strongly. The index was down 1.2 percent and lagging European peers as the strong sterling dented its exporter stocks

(Reporting by Tom Finn; Editing by Tommy Wilkes)