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David Frost, the UK’s chief Brexit negotiator and his EU counterpart Michel Barnier have been conducting intensive talks in Brussels. Both sides are attempting to thrash out the finer details of a deal with reoccurring issues over fisheries, state aid and the so-called level playing field on competition.
This afternoon European Commission President Ursula von der Leyen sent financial markets surging after confirming “better progress” had been made in the most difficult areas of the negotiation.
The remarks by the EU chief fuelled renewed confidence amongst traders with the Pound storming in value.
As of 2pm, Sterling rose by 0.4 percent against the US dollar.
The British pound was trading at £1.3271-$1 compared to £1-$1.3224 at the previous close.
Meanwhile, against Europe’s single currency, Sterling increased by 0.2 percent.
As of 2pm on the exchanges, the Pound was trading at £0.8942-€1 (£1-€1.12) compared to £0.8953-€1 at the previous close.
Jane Foley, head of FX Strategy at Rabobank, explained markets had been buoyant by the progress but warned the rise could be limited if there is not a substantial agreement between the UK and EU.
She said: “For some weeks GBP has been supported by the view that some kind of deal will be announced this month.
“This is still the favoured outlook, though scope for any relief rally is set to be limited by the likelihood that any deal will be a skeleton one.”
This morning Mr Barnier held a behind-closed-doors meeting to update officials from the EU27 about the state of play in negotiations.
One EU official said Brussels and the UK are “close” to finalising a deal.
This was later supported by Ms Von der Leyen who explained the scope for a deal had been narrowed after a breakthrough in both state aid and the level playing field.
The EU Commission President did, however, caution her renewed optimism and insisted there was still more than needed to be done.
She said: “After difficult weeks with very, very slow progress, now we’ve seen in the last days better progress, more movement on important files.
This is good.
“Within the frame of the level playing field, progress for example has been made with state aid.
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“But there are still quite some metres to the finish line so there’s a lot of work to do.”
Both sides had hoped to reach a deal by the end of November in order to give both parliaments enough time to scrutinise the legal texts – which is set to amount to more than 600 pages.
The Brexit transition period will officially end in less than six weeks’ time at midnight on December 31.
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