Sterling jumped against the euro as Theresa May flew to Brussels to hold special Brexit talks with European Union president Jean-Claude Juncker and chief negotiator Michel Barnier, in the hope of breaking the current deadlock in Brexit negotiations. Sterling hit 1.127 against the euro and 1.329 against the US dollar, with expectations that May would help move along negotiations in a positive manner. Connor Campbell, financial analyst at Spreadex.com, said: “This news seems to have helped buoy the pound, which is keeping above $1, while surging to a fresh 2 week peak against the euro with a 0.3 per cent rise.”
Despite the market optimism, May isn’t anticipated to make any big new proposal in her after-dinner remarks tonight but instead to highlight the worth of the financial settlement offer upon the UK leaving the EU made in her speech in Florence – worth around £20bn. However last week’s statement by political allies of the German chancellor, Angela Merkel, which confirmed that the EU wants the UK to agree to pay up to €100bn (£89.6bn) to settle the bill upon leaving, means May’s speech seems unlikely to have the intended impact. Michael Fuchs, the vice-chair of Merkel’s CDU/CSU group in the German parliament, has also said the €20bn proposed so far by Britain was insufficient.
The October summit was known to be the first date in the EU calendar on which a gathering of the 27 heads of government could announce that they were satisfied with the Brexit divorce negotiations and agree to start talking about trade. Yet a further blow is expected at a meeting on Friday, at which the UK will not be present, when they are expected to release a statement officially to say that “insufficient progress” has been made so therefore they are unable to go onto the second phase of trade negotiations.
In a Facebook post today, the prime minister guaranteed to make it as easy as possible for EU citizens to remain in the UK after Brexit. May claimed that the application process for settled status would be “streamlined” and the cost “as low as possible”. In her post, she also said those who currently had permanent residence would be allowed to “swap this” for settled status. The message seems timely in a bid to persuade the EU to progress Brexit talks.
Sterling has been heavily affected by Brexit developments in recent months, and doesn’t seem likely to stabilize with the predictions for the upcoming talks being less than positive.
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