While uncertainty remains on whether the pact will be ratified by British lawmakers, news of the agreement was enough to boost the euro 0.5% against the dollar and 0.66% against the British pound. "The fact that we have a deal means that we are further from a hard Brexit and all eyes will shift to this weekend's vote," Brad Bechtel, global head of FX at Jefferies, said in a note.

The development in the Brexit saga marks a welcome respite for the euro which has dropped more than 3% this year. Investor sentiment towards the single currency has been hurt by a broad economic slowdown in Europe driven by the protracted US-China trade dispute. Sterling was 0.18% lower at $1.2807. The dollar has come under pressure this week, shedding about 0.6% against a basket of currencies.

The greenback, which fell on Wednesday after weak US retail sales data supported the case for further interest rate cuts by the Federal Reserve, extended its weakness on Thursday. The Norwegian crown weakened to an all-time low of 10.1800 against the euro. The Australian dollar held near the day's highs, up 1.04% against the dollar after jobs data showed buoyant hiring, lowering chances of monetary easing in November.

Copyright Reuters, 2019