Jean-Claude Juncker, the president of the European Commission, has told Sky News he believes "we can have a deal", prompting the pound to notch further tentative gains against the dollar and reach its highest value since July.
The EC's president also confirmed he had received written proposals from 10 Downing Street yesterday evening, but did not elaborate further.
In the interview with Sky News, Juncker said: "I had a meeting with Boris Johnson that was rather positive. I think we can have a deal. I am doing everything to have a deal because I don't like the idea of a no-deal because I think this would have catastrophic consequences for at least one year.
We are prepared for no-deal, and I hope Britain is prepared as well - but I'm not so sure."
"We are prepared for no-deal, and I hope Britain is prepared as well - but I'm not so sure."
Juncker spoke on the hitherto intractible issue of the Northern Irish "backstop": "I was asking the prime minister the other day to make concrete proposals as far as so-called alternative arrangements are concerned, allowing us and Britain to achieve the main objectives of the backstop. I don't have an erotic relation to the backstop. If the results are there, I don't care about it."
The British prime minister Boris Johnson told reporters that some "progress" was being made in talks with Brussels, yet cautioned it was important not to "exaggerate" this.
Meanwhile, the UK's Supreme Court is due to rule by early next week whether Johnon misled the country in suspending Parliament for political gains.
The pound rose to $1.2548 on the back of Juncker's comments this morning.