The pound rose to a three-week high yesterday after Michel Barnier said the European Union was prepared to offer Britain a unique partnership as Brexit negotiations enter the final phase.
The EU’s lead negotiator made the pledge after holding talks with Heiko Maas, the German foreign minister, in Berlin before more talks in Brussels tomorrow. Mr Barnier said that the bloc was preparing this autumn to sign a political declaration setting out a future relationship with Britain that would be “as close as possible”. He added: “We are ready to propose a partnership like we have never had before with any third country.”
After his comments, the pound climbed to its highest level against the US dollar since August 3, climbing to $1.3014. Sterling jumped more than 1 per cent, its biggest daily rise in two months. Against the euro, it rose 1 per cent, to €1.118.
“People are viewing this as a sign that there’s going to be some sort of close-ish co-operation between the European Union and the UK after the UK leaves, but this is a turning point,” David Madden, an analyst at CMC Markets, said.
Manuel Oliveri, a foreign exchange strategist at Credit Agricole SA, described the comments as “the best he’s ever said, even though it’s early days”. “[The rally] could easily go further as the market was very much becoming aligned with a no-deal Brexit,” he said.
The optimistic tone was echoed by Dominic Raab, the Brexit secretary, before a five-hour negotiating session he is due to have with Mr Barnier in Brussels tomorrow. “I’m confident that a deal is within our sights,” he told the Lords EU committee. “We’re bringing ambition, pragmatism, energy and, if it is matched, we get a deal.”
However, Mr Barnier repeated his warning, a veiled criticism of the government’s Chequers white paper, that Britain would not be able to pick which bits of the single market it wanted to take part in. “We respect Britain’s red lines scrupulously. In return, they must respect what we are,” he said. “Single market means single market . There is no single market à la carte.”