Pound surges as UK-Irish talks reveal Brexit deal hopes
The pound has rallied after the UK Government appeared to offer concessions on a Brexit deal.
The British currency surged nearly 2% on Thursday after talks between UK and Irish premiers Boris Johnson and Leo Varadkar ended with positive but cautious comments.
Sterling rose from just over $1.22 to $1.24 during two hours of intense trading on Thursday, climbing 1.4% as the leaders tried to reach a compromise over the term of Britain's exit from the EU. At one point sterling was on track for its best day in more than three years before a slight pullback late in the day.
Following the positive tone coming from Johnson and Varadkar on the main point of contention in an orderly exit from the EU - the Irish backstop -we can expect global stock markets and the British pound to experience a short-term boost"
Irish prime minister Leo Varadkar said following talks with Boris Johnson that he was "now absolutely convinced" that Britain wanted a Brexit deal and that it was possible to achieve one by the end of October.
The UK has still not come forward with a workable, realistic proposal. But I have received promising signals from Taoiseach @LeoVaradkar that a deal is possible. Even the slightest chance must be used. A no deal #Brexit will never be the choice of the EU.
— Donald Tusk (@eucopresident) October 11, 2019
European Council president Donald Tusk warned however that the UK "has still not come forward with a workable, realistic proposal".
"I have received promising signals from Taoiseach @LeoVaradkar that a deal is possible. Even the slightest chance must be used. A no deal #Brexit will never be the choice of the EU," Tusk said.
Global stock markets and the British pound are set to experience a short-term boost following last-ditch talks in the Brexit negotiations on Thursday between the UK Prime Minister and his Irish counterpart.
This is the optimistic forecast from Nigel Green, the CEO of deVere Group.
Leo Varadkar in which they agreed that there was a "pathway to a possible deal" as they discussed the issues of customs and consent.
The UK government believed that they had gone some way to meet EU demands in their new proposals, by offering to keep Northern Ireland in the single market. They were disappointed that there appeared to be no reciprocity coming from the EU side.
Any sign of Dublin meeting that offer with a similar concession could be the start of serious negotiations towards a deal with the EU.
The deVere CEO says: "Global stock markets would almost inevitably experience a significant shock to the downside in the event of a no-deal Brexit.
"The UK would experience the worst fallout, but US, European and Asian equity markets would also take a considerable hit.
"In addition, while some of the impact of a no-deal Brexit has been priced-in, the value of the British pound - which is already down 17% than before the 2016 referendum - would also likely be weighed down further."
He continues: "This is why, following the positive tone coming from Johnson and Varadkar on the main point of contention in an orderly exit from the EU - the Irish backstop -we can expect global stock markets and the British pound to experience a short-term boost."
Subscribe to International Investment's free, twice-daily, newsletter
More on Brexit
