The pound is gaining strongly. Hope for a Brexit deal

The pound to dollar exchange rate has just reached a minimum, but on Thursday there was a meeting between British Prime Minister Boris Johnson and Irish Prime Minister Leo Varadkar. The gentlemen have not agreed on any particulars, but issued a joint statement that they see a chance to sign a Brexit contract. It was enough for the pound to shoot. On Thursday, 10.10.2019 after 20: 00 pound was strengthening against the US dollar by 1,9 percent

The meeting of the prime ministers of Great Britain and Ireland was to give an answer to whether hard Brexit, i.e. the British leaving the European Union without a contract is the only solution. In a statement issued jointly by the heads of government, we read that no, everything can still happen, but there is no point in searching for details in it.

The Brexit date is getting closer

The Brexit deadline is three weeks. Prime Minister of Great Britain Boris Johnson says all the time that he will no longer apply for his extension and his country will leave the EU at the end of October. Meanwhile, there is no agreement with the European Union and looking at the messages sent by both parties, it is difficult to expect that it would be closer to it than in recent days.

After the Thursday meeting of the prime ministers of Great Britain and Ireland, which took place in London, we could read, however, that there are chances for an agreement on Brexit.

Prime Minister and Taoiseach (i.e. the head of the Irish government - ed.) they had a detailed and specific conversation. They still believe the deal is in everyone's interest. They agreed that they see a way to a possible agreement " - we read in the statement published after the talks.

Positive message without details

Despite this, the British media are very reserved about this text. Commentators point out that we did not know any details of the conversations held, nor the direction in which they would go. We only know that the heads of government will continue talks with each other.

This may not be enough, however. For if they do not change the proposal presented to the European Union, they will be of little use. The UK wants customs controls on some goods on the Irish border with Northern Ireland, but does not intend to invest in any infrastructure that could make it possible. On the other hand, the European Union considers such "control" to be a legal fiction and strongly rejects the proposal as it stands. The other - at least for now - has not been introduced by anyone.

Agreement on Brexit in a week?

The next European Union summit will be held on 17-18.10.2019 October XNUMX. The agreement may be signed on it, but nothing - apart from Thursday's statement - indicates that the negotiations are approaching the end. The main bone of contention is the status of Northern Ireland. The head of the British government argues that it should be part of the customs union. This is unacceptable to the EU. There has been no softening of the UK's negotiating position on this matter. They are also still supported by the Prime Minister of Ireland, Leo Varadkar.

“The position of the European Union and Ireland has not changed. Backstop is an integral part of the agreement on the withdrawal of Great Britain from the Union " Irish Prime Minister Leo Varadkar underlines.

Great Britain is to leave the European Union 31 on October 2019 year. British Prime Minister Boris Johsnon has always said that this will happen regardless of whether the talks with the European community end in an agreement. However, there is no support in the British Parliament. Both its representatives and most economists claim that tough Brexit will drive the UK economy into recession.

Hope for talks, hope for the market

However, such an unspecified statement was enough for the market to react enthusiastically. The pound began to dynamically strengthen against the dollar and on Thursday after 20 grew by more than 1,88 We also managed to clearly break the technical and psychological barrier around 1.24. Technically speaking, overcoming it opens the way for further growth, but in the case of this pair it will be much more important to further develop talks on the agreement or to abandon them.

Chart GBP / USD, M30 interval. Source: xNUMX XTB xStation