STERLING recovered a small amount of its recent heavy losses yesterday, after conciliatory comments from the European Union’s chief Brexit negotiator raised hopes that a hard Brexit could yet be avoided.
Michel Barnier declared the EU was prepared to offer a partnership with Britain such as there had never been with “any other third country”.
However, he emphasised: “We respect Britain’s red lines scrupulously. In return, they must respect what we are.”
He added: “Single market means single market…There is no single market a la carte.”
Prime Minister Theresa May has stated categorically that the UK will leave the European single market. And International Trade Secretary Liam Fox declared earlier this month that there was a 60-40 chance of a no-deal Brexit.
David Madden, analyst at CMC Markets, said of Mr Barnier’s comments: “Traders took this as a sign that an agreement between the two sides has a greater likelihood of being achieved. The date to reach an agreement has been pushed back to mid-November, but for now traders are more optimistic about a deal being struck.”
Sterling was, at 5pm in London, trading around $1.3002, up by 1.18 cents on its previous close.
The euro was trading around 89.90p, down 1.03p on its previous close. It was trading around 86p in April, so has held on to most of the ground gained since then against the pound. After the London close, the euro traded either side of 90p and the pound gyrated above and below $1.30. Sterling, which traded above $1.40 this spring, was close to $1.50 on June 23, 2016, ahead of the EU referendum result.
Sterling sank to its lowest level against the euro in nearly a year on Tuesday, after Mrs May said a no-deal Brexit, whereby the UK left the EU without agreement over its future relationship with the bloc on trade and other key issues. “wouldn’t be the end of the world”.
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