The Pound has rallied overnight following comments from European Commission president Juncker which have increased optimism of a Brexit deal being made before the end of October.
In an interview with Sky news, he said “we can have a deal” on Brexit. He also said he was doing “everything to get a deal” and that he is prepared to get rid of the so-called backstop from a withdrawal agreement “if the objectives are met – all of them”.
Although these comments aren’t anything new, and they’ve been trying to find alternatives to the Irish backstop for a long time, the market has taken this cautiously optimistic tone positively and traders have bought into the Pound. Boris Johnson has sent some confidential proposals for alternatives to the backstop and there seems a new willingness by the EU to explore these ideas and accelerate Brexit negotiations.
Irish foreign minister, Mr Coveney, has said however that “there’s still a big gap between what the British government has been suggesting that they’re looking for and what Ireland and the EU need in terms of getting a deal”. Therefore, it will all depend on how well Boris’s new proposals protect the EUs red lines. Traders eyes will focus on the upcoming negotiations between Mr Barnier and Steve Barclay.
Yesterday, we had the last day of the legal battle in the Supreme Court over the Government proroguing of Parliament. We should get their final decision on this early next week, so this is another thing to bear in mind.
As a result, the Pound has pushed up over 1% against the Euro and now trades close to a 4-month high. The GBP/USD has also rallied a 1% higher and trades around the best levels in 2-months.