Pound gains on indications EU open to revisiting alternative Irish border ideas

Jul 18, 2019

The Pound has recovered some ground this morning on signs that the EU might be open to further talks around the contentious Irish border issue.

Mr Barnier, the chief EU Brexit negotiator, said he was open to look at alternative arrangements for the border. Previously, the EU have categorically ruled out revisiting the withdrawal agreement, of which the Irish backstop is a key part, so his comments suggest a slight change of tone. That said, he stated that there is no “easy solution” to the issue and that it will take a long time to find possible alternatives.

Additionally, the Irish prime minister (Varadkar) has also said this morning that Ireland are open to finding genuine solutions to avoid a hard border and offered a more positive tone. As it stands, the most likely plan is to find technological solutions to prevent a hard border and allow goods and people to flow (relatively) freely between the two countries.

In other news, UK retail sales beat estimates this morning with a strong showing from non-food stores and an increase in the sale of second-hand goods. This has further supported the Pound this morning but ultimately does little to change the overall bigger picture. We would need a consistent run of positive economic data releases to change the BoE and markets’ outlooks (or obviously some extremely positive Brexit news).

As a result, the Pound has reclaimed nearly a cent against both the USD and Euro from yesterday’s fresh lows.  Traders’ eyes will now move onto UK Parliament to see if the latest attempt to block a no-deal Brexit will gain some legs.