Pound gains as U.K., EU reach proposed Brexit pact
LONDON The pound surged Tuesday after negotiators from Britain and the European Union struck a proposed divorce deal that will be presented to politicians on both sides for approval.
Sterling rose above US$1.30 after Irish broadcaster RTE cited an unidentified senior official as saying that the key part of the Withdrawal Agreement had been agreed.
The currency has bounced in response to a “breakthrough in the Brexit negotiations,” said Valentin Marinov, a strategist at Credit Agricole SA.
The pound rose as much as 1.4 per cent to US$1.3027. It climbed 0.8 per cent to 86.66 pence per euro. The yield on the U.K. 10-year government bond rose as much as six basis points to 1.52 per cent.
The proposed deal came after a year-and-a-half of stalled talks, false starts and setbacks. On Tuesday, negotiators agreed on proposals to resolve the main outstanding issue: the Irish border.
British Prime Minister Theresa May ’s office said the Cabinet would hold a special meeting Wednesday to consider the proposal. Its support isn’t guaranteed: May is under pressure from pro-Brexit ministers not to make further concessions to the EU. May told the Cabinet earlier Tuesday that “a small number” of issues remain to be resolved in divorce negotiations with the European Union, while her deputy, David Lidington, said the two sides are “almost within touching distance” of a Brexit deal.
Britain wants to seal a deal this fall, so that Parliament has time to vote on it before the U.K. leaves the bloc on March 29.
The main obstacle has long been how to ensure there are no customs posts or other checks along the border between the U.K.’s Northern Ireland and EU member Ireland after Brexit.
Irish national broadcaster RTE said the draft agreement involves a common customs arrangement for the U.K. and the EU, to eliminate the need for border checks.