The British pound jumps because the EU's main Brexit negotiator says a commerce deal is inside attain
BRUSSELS, BELGIUM – FEBRUARY 3: The European Union's chief negotiator for Brexit, Michel Barnier, gives a speech during a press conference in Brussels, Belgium on February 3, 2020.
The pound sterling rose more than 0.8% against the US dollar on Wednesday after the EU signaled that a trade deal with the UK is still possible.
"Despite the difficulties we are facing, an agreement is within reach if both sides are willing to work constructively, if both sides are willing to compromise, and if we are based on legal texts and in the next few days are able to make progress. " If we are ready in the next few days to solve the sticking points, the most difficult issues, "EU negotiator Michel Barnier told the European Parliament.
His comment gave traders optimism that a trade deal would be reached between the UK and the EU even though their negotiations have been going on for months on the same three issues.
British Prime Minister Boris Johnson adopted a somber tone on Friday when he warned exporters to prepare for a no-deal with the EU. A government spokesman went on the same day and said that if the EU did not change its approach to the talks, European negotiators would not have to travel to London this week.
British officials were disappointed late last week when European leaders called on the UK to "take the necessary steps to enable an agreement".
These tensions have halted negotiations, but the EU has now said it is ready to return to the table as soon as the UK government so decides.
"Find the necessary compromises"
"We will look for the necessary compromises on both sides to do our best to reach an agreement, and we will do so by the very last day that this is possible," Barnier told the legislature on Wednesday.
"Our doors will always stay open until the end, but … we will stay firm," he added.
The UK terminated its EU membership in January but will follow EU rules until the end of the year so that both sides can work on new trade deals. These will differ from the current zero tariff system. Unless new trade rules are developed, exporters will face higher costs and barriers to selling goods between the two blocs.
UK Government Secretary Michael Gove told Sky News on Sunday that the likelihood of an agreement being reached is less than 50%. Earlier this month he had assigned it with a 66% probability. The negotiators still have to compromise on fisheries, competition rules and future control of their potential business.
In addition, the EU has announced that it will not sign a new trade deal until the UK government fully complies with the withdrawal agreement it signed earlier this year, which paved the way for Britain to leave the bloc. The London government has tabled a bill repealing parts of these previous agreements, and the EU has called for pending legislation to be corrected to comply with its previous agreements.