11/09/2018 - Barnier Optimistic On Brexit Deal

GBP

Sterling rallied yesterday afternoon after European Union chief Brexit negotiator Michel Barnier once again struck an optimistic tone as he said a deal on the U.K.’s orderly withdrawal from the bloc is possible within 6-8 weeks. The news drove Sterling as much as 1% to the highest levels seen in more than a month.

Barnier told a conference on Monday in Bled, Slovenia, that it was “realistic” and “possible” to get an agreement by the start of November. This would allow time for the deal to be approved by the British and European parliaments. He warned that several issues, including the contentious issue of the Irish border, need to be overcome.

Barnier’s remarks are the latest in a series of more positive sounds from the EU side of the Brexit negotiations. The bloc is exploring ways to make the section of the draft Brexit treaty dealing with the Irish border more palatable to Britain. Germany has privately agreed to accept a less detailed agreement and Barnier last week told U.K. lawmakers there are “lots of useful things” in the government’s post-Brexit blueprint.

Negotiations continue in Brussels this week before the EU’s 28 leaders discuss Brexit at a summit in Salzburg, Austria, on Sept. 20. It will be the first such discussion since June. The leaders are expected to agree to hold an extraordinary meeting in November, probably on Nov. 13, to sign off on a deal on future relations.

Figures released in the morning showed GDP increased by 0.6% after the hottest summer since records began helped the British economy gather strength in the three months to July, as shoppers hit the high street and England progressed to the semi-finals at the World Cup.

Key Announcements

09:30 – GBP: Average Earnings Index is expected to increase to 2.4%