Pound surges against dollar and euro as EU agrees to intensified Brexit talks

Sterling jumped 2.1 per cent against the dollar and 1.8 per cent against the euro after Boris Johnson received a major boost from the EU

Ben Chapman
Friday 11 October 2019 15:20
Comments
Michel Barnier says Brexit 'like climbing a mountain' as positive deal talks continue

The pound surged against the dollar and the euro on Friday as hopes grew that a Brexit deal can be done before the imminent deadline.

Sterling jumped 2.1 per cent against the dollar to $1.269 and 1.8 per cent against the euro to €1.149.

The gains eclipsed those made yesterday, which resulted in the pound’s best daily rise since March.

Friday’s surge came after British and EU negotiators agreed to intensify Brexit talks, in a major boost for Boris Johnson’s hopes of getting a deal.

EU officials confirmed at lunchtime that negotiations will be entering a “tunnel” – Brussels jargon for intense private negotiations where leaks are kept to a minimum.

Despite the news, Donald Tusk, the European Council president, warned that current UK proposals are neither “workable” nor “realistic”.

However, he also said he has heard “optimistic messages” that a Brexit deal can be reached.

Neil Wilson, chief market analyst at Markets.com, said sterling’s rally over the last two days was “astonishing” but the ride is not yet over.

“Now that negotiations are in the tunnel phase, we should anticipate a lot less news flow but there will be just as much speculation as ever,” he said.

“Of course, this rally is built on shaky foundations and is susceptible to a crash if the negotiations don’t produce a deal for MPs to vote on.”

Stocks also rose around the world on the back of speculation that the US and China may be closer to reaching a trade deal after 15 months of damaging rhetoric and tariff rises.

Markets in the US, Japan, the UK, Germany and France all posted strong gains.

Donald Trump struck a positive tone ahead of his meeting with Chinese officials on Friday.

The US president tweeted: “Good things are happening at China trade talk Meeting. Warmer feelings than in recent past, more like the old days. I will be meeting with the vice premier today. All would like to see something significant happen!”

In London, the globally focused FTSE 100 rose less than other European markets, in part due to the pound’s renewed strength. Many multinational firms earn revenues in other currencies before converting them into sterling, which means their bottom lines are given a foreign exchange boost when the pound is weak.

The more domestically focused FTSE 250 soared more than 3 per cent in response to the positive noises emanating from Brussels.

A UK government spokesperson and an EU Commission spokesperson both separately described the morning’s meeting as “constructive”, as did Michel Barnier, the EU’s chief negotiator.

“Brexit is like climbing a mountain,” Mr Barnier said. “We need vigilance, determination and patience.”

A European Commission spokesperson said: “The EU and UK have agreed to intensify discussions over the coming days.

“The EU’s position remains the same: there must be a legally operative solution in the withdrawal agreement that avoids a hard border on the island of Ireland, protects the all-island economy and the Good Friday (Belfast) Agreement in all its dimensions, and safeguards the integrity of the single market.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in