Pound sterling jumps as Barnier says Brexit deal by November is ‘realistic’

EU's chief negotiator said it would be possible to reach agreement in six to eight weeks

The pound jumped to its highest against the dollar in a month on Monday afternoon, after the EU’s chief Brexit negotiator Michel Barnier said the possibility of reaching a deal by November was “realistic”.

Sterling was volatile in early trading on Monday, and rose just 0.1 per cent against the dollar after the Office for National Statistics published a strong GDP reading for the three months to the end of July.

However, the pound jumped 0.9 per cent against the dollar to hit $1.13040, and rose 0.46 per cent against the euro to hit €1.1233, after Mr Barnier made his comments while speaking at a conference in Bled, Slovenia.

“I think that if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within six or eight weeks,” he said.

“Taking into account the time necessary for the ratification process, the House of Commons on one side, the European Parliament and the Council on the other side ... we must reach an agreement before the beginning of November. I think it is possible.”

Fiona Cincotta, senior market analyst at City Index, said the positivity on Brexit had “come just in time for Theresa May”, which also factored into the pound’s upward turn.

“Given the political pressure which Theresa May is under Brussels are realising that there is a strong chance that May won’t make it to the finish line unless there is some progress to report sooner rather than later,” Ms Cincotta added.

“Reports that Barnier may have been too inflexible with his negotiating approach so far and Brussels possibly re-establishing Barnier’s negotiating guidelines are all offering hope for stability in Theresa May’s government and a better Brexit deal - both of which are pound positive.”

Meanwhile, Connor Campbell, financial analyst at Spreadex, said: “If one person can shift sterling at the moment it is Michel Barnier. The currency is desperate for any signs of good news from the EU’s chief negotiator, often making the most of some pretty tepid statements.

“Monday’s gains seem slightly more justified however, with Barnier saying that it was a ‘realistic’ possibility a deal could be reached by November. And though, of course, the content of any deal is the thing that really matters, at the moment the pound will take what it can get.”

Sterling was boosted last week when Mr Barnier said the EU was “determined” to reach agreement with the UK over Brexit.

“We want to establish the closest relationship possible with your country - and I will be saying this in greater detail later - and what will be an unprecedented relationship. We are determined to find an agreement,” he said.

Both the EU and Ireland have said they will not agree to a deal that does not contain a backstop to prevent a hard border between Northern Ireland and the Republic, which has long been a sticking point for negotiators.

Mr Barnier said last week that the Irish border backstop was still a top priority.

“Brexit without a backstop would create a problem for Northern Ireland, and the inhabitants of the island of Ireland we think are entitled to some certainty regarding the conditions for future co-operation between the two countries,” he said.

Additional reporting by newswires