GBP/USD Pops as Fears of No-Deal Brexit Ease

© Reuters.
© Reuters.

By Yasin Ebrahim – The pound rose against the dollar Wednesday as investors continued to bet the UK and EU will agree to a trade deal even as talks on fisheries continue to stall progress and Prime Minister Boris appears unwilling to rule out walking away from negotiations.

rose 0.72% to $1.303.

UK Prime Minister Boris Johnson is reportedly set to decide on Friday whether to walk away or continue talks with the EU, according to UK media reports. The prime minister will continue negotiations with European Commission president Ursula von der Leyen later on Wednesday. 

The reports come just hours after hopes were boosted that a no-deal Brexit would be avoided as the prime minister was reported to be willing to continue talks to secure a trade deal beyond his suggested deadline Thursday, according to Sky News.

Ahead of the two-day European summit on Thursday, Angela Merkel has called for EU leaders to be more realistic in accepting Britain’s negotiating position on fisheries, which remains a key sticking point in trade talks.

“There are still differences, with fisheries being the starkest. We need to get substance settled and not having a common text to work from has made progress doubly difficult,” a UK spokesperson, Sky News reported.

Analysts have trimmed forecast for a no deal Brexit in recent days, with TD Bank cutting its odds of “hard Brexit” to 20%-to-25% from around 40% previously.  A no-deal Brexit “probably would come more as an ‘accident’ at this stage than by intent,” TD Bank Strategist Ned Rumpeltin said.

“There are limits to that, however, as the market will eventually turn its attention to some of the other difficulties the U.K. economy now faces,” Rumpeltin added.

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