Brexit deal to boost sterling

By Business Editor, Eamon Quinn 

Sterling rose against the euro on hopes of some sort of breakthrough in the Brexit talks, with a prediction the currency could soar if progress is made on the issue of the Irish border in the coming days.

Earlier this week, sterling climbed on reports out of London that Theresa May’s government had accepted the so-called divorce bill of up to €50bn.

Any resolution over the divorce settlement would leave the Government here and the EU’s Brexit chief negotiator Michel Barnier to decide whether the British had offered enough over the border and the all-Ireland economy for the talks to go ahead to a second stage. Sterling traded at 88.1 pence.#

Owen Callan, senior analyst at Investec Ireland, said sterling would likely get “a boost” in the coming days if the two issues of the divorce bill and the border were sown up.

And chief economist at Davy, Conall Mac Coille said it came as a surprise that Ms May appeared to be offering to settle the divorce bill, but the Irish border remains the stumbling block because the UK hasn’t yet indicated whether any offer would be settled in line with the Good Friday Agreement.

The “leap higher in sterling, with the pound crossing the $1.35 threshold for the first time in over two months, acts as a nice reminder that the broad expectation was for the pound to keep falling, what with the BoE (Bank of England) hike out of the way and Brexit negotiations going badly,” said Chris Beauchamp, IG’s chief market analyst. “The apparent breakthrough on the bill and indications of a warmer tone between the two sides has caught the market on the hop,” he said.

Meanwhile, uncertainty over the shape of the Brexit deal ahead of this month’s summit is starting to dent confidence in Irish business, according to the Association of Chartered Certified Accountants (Acca), who fear that business will have less time to shape their contingency plans.

Irish businesses need reassuring about the terms of the transitional period after the UK leaves the EU in 2019, said Acca Ireland head Liz Hughes.

KEYWORDS: Sterling, Euro, Brexit


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