Pound hits two-week high as markets grow optimistic over Brexit deal
The pound hit a two-week high today as the markets expressed optimism that a Brexit deal is close.
Sterling rose as high as 1.308 against the dollar this morning, its highest since 18 October, following a report from The Times that the EU was set to agree to compromise over the thorny issue of the Irish border.
Senior EU figures may reportedly propose an “independent mechanism” that would allow Britain to end a so-called Irish backstop; a temporary customs arrangement with the EU that would exist until a permanent solution can be agreed.
Such an arrangement – where Britain and Northern Ireland act as one customs territory with a link to the EU’s customs union, which includes Ireland – would prevent a hard border between the Republic of Ireland and Northern Ireland until negotiators find a longer term measure.
Yesterday it emerged that Brexit secretary Dominic Raab had demanded a three-month time limit on the backstop, at which point Britain could choose to end it.
However, Ireland’s Taoiseach, Leo Varadkar, ruled out giving Britain the right to unilaterally kill the backstop on a call with Prime Minister Theresa May yesterday.
But he said he remained open to the idea of a review of how the arrangement was working.
“The Taoiseach indicated an openness to consider proposals for a review, provided that it was clear that the outcome of any such review could not involve a unilateral decision to end the backstop,” a spokesperson said.
The news comes as media leaks suggest pro-Brexit Cabinet ministers are set to urge May to stand her ground on the question of the Irish border, according to Reuters.
Today’s Cabinet meeting is expected to see ministers claim a joint UK-EU review of the backstop would leave Britain abiding by EU rules.