The Pound has jumped against the Dollar and Euro this afternoon after reports that the UK and EU negotiators are closing in on a draft Brexit deal. With these kinds of reports, it just shows how vulnerable Sterling is to headline news. At present this report is unconfirmed but just shows that markets move more on speculation rather than hard-line fact.
It is widely expected that if a draft deal can be reached then GBP/EUR could hit close to the 1.20’s and GBP/USD into the low 1.30’s
However, there is still a lot to overcome and even if a deal is agreed, parliament would need to back the agreement and as we have seen from previous deals this is far from easy.
What is currently known is that the European Union has given the UK until the end of Tuesday to work out a Brexit deal that can be approved at the summit at the end of this week but said a delay to the October 31st scheduled departure date and a breakdown of talks were also still on the cards.
The main sticking point remains the border between EU-member Ireland and the British province of Northern Ireland.
“Even if an agreement has been difficult, more and more difficult, it’s still possible this week,” Barnier told reporters in Luxembourg, where he briefed EU ministers. Barnier also said he saw three possible scenarios ahead – a deal on Tuesday, a Brexit delay, or a breakdown of talks.
However, Ireland’s foreign minister made clear that the window of opportunity was closing, saying a deal must be done by the end of Tuesday to be put forward for approval at the summit in Brussels on Thursday and Friday.
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