Barnier and Barclay

Top: Michel Barnier, Stephen Barclay after talks on 11 October, photographer: Lukasz Kobus, European Union, 2019. Source: EC – Audiovisual Service.

The pound has risen 2% over the euro and 2.50% against the dollar over the past week as expectations of a Brexit deal between the EU and the UK rose, with the currency all-important Competitors outperformed.

In fact, sterling is the most important currency with the best performance of the past month, a sign that traders have quickly come up against expectations that a Brexit will take place without a deal on October 31st.

Weekly Gains GBP "width =" 750

Above: Sterling's relative performance last week

"By putting an end to more than three years of insecurity and preventing a tough Brexit, a deal at the end of the month would be a great gain for the UK and a modest gain for the EU27 economies." The United Kingdom's real gross domestic product would probably be lower than the previous month accelerate." below 1% on an annual basis to over 2% ", says Holger Schmieding, Chief Economist Berenberg Bank,

It is therefore no wonder that the foreign exchange markets give a positive rating to the pound sterling in view of the growing opportunities of a Brexit deal.

The pound-to-euro exchange rate closed the week at 1.1460, a high near the fourth month. The pound to dollar exchange rate closed at 1.2640, a three-and-a-half-month high.

"Boris Johnson and Leo Varadkar believe they can see a way to a Brexit deal, and Sterling has its best 48 hours since the referendum," says Kit Juckes, foreign exchange strategist Societe Generale in London.

Monthly gains in pounds sterling "width =" 750

Above: Sterling's relative performance last month.

"We have heard many positive things from the UK, Ireland and the EU suggesting that an agreement is imminent, and investors were pleased to buy the pound in the run-up to the EU summit which, on Thursday 17 October, starts. " Fawad Razaqzada, market analyst Forex.com,

However, a critical week for Sterling is imminent: not only must an agreement with the EU be concluded, but the deeply divided British Parliament must pass. We would expect the Sterling rally to be extended when Parliament passes a Brexit deal next Saturday.

However, Parliament's failure to reach an agreement will almost certainly lead to the reversal of recent gains in profits and extreme volatility for those with currency fluctuations.

Prime Minister Boris Johnson will call on Parliament to support all Brexit agreements that he secures from the European Union within 24 hours of the European summit next week. The times reported on Saturday.

Johnson will table a motion for a vote on Saturday, calling on the legislator to support any agreement he brings to the EU at the summit on 17-18 October.

"If a deal is not secured, the prime minister may be forced to request an extension of Brexit, and with no details to be released and parliament approving a deal, there are still major obstacles in the way," says Simona Gamborini. an economist with Capital economy.

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Preparations for a vote in Parliament were taken after the European Union agreed Friday on Friday to enter into intense "tunnel" negotiations with the UK to try to negotiate a new deal allowing the British pound a second day As a result, oversubscription rates were recorded as mood music The Brexit environment improved noticeably.

British Brexit Secretary Stephen Barclay met with his counterpart Michel Barnier on Friday morning in Brussels. A "constructive" meeting was held in a statement discussing details of the most recent United Kingdom proposals for the Northern Ireland border. The negotiators agreed to hold intensive talks over the next few days to present a sustainable agreement to EU leaders at the European Council summit on 17 and 18 October. The Irish border, however, remains the key point.

An EU ambassador said The telegraph EU leaders "give the go-ahead" for Barnier to enter the "tunnel phase", hoping to reach agreement by the EU summit next week.

In the "tunnel phase" the negotiators seek secrecy and go through the proposals line by line.

Another boost for Sterling came when it seemed as though a key element in any business puzzle – Northern Union Trade Unionist DUP – did not directly reject the rationale of the proposal they believe is cooking.

According to Steven Swinford, Deputy Political Editor at The Times, "the DUP is not necessarily against a tariff partnership with the EU after Brexit."

"Provided it does not mean that NI is excluded from participating in new trades, we might be supportive," said a DUP source.

However, we warn that the DUPs have not agreed to support the deal, and we know that they will not hesitate to reject the deal if they think it falls short of their expectations.

If the DUP does not support a deal, we expect a large proportion of Eurosceptic Conservative MPs to follow suit to ensure that a deal is almost certainly not going to happen to Parliament.

The confusion and political turmoil that such an outcome would bring should in turn spark a sharp reversal in sterling valuations.

"If no agreement is reached and Johnson won the majority of seats in early elections later this year, a Brexit without agreement would be the most likely outcome, in which case the UK is facing a recession – trade and trade disruption." Workers at the UK-EU border, as well as a likely decline in foreign investment in the UK, would seriously affect supply. A further decline in the British pound would push up import prices and depress real demand, "says Schmieden von Berenberg.

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