Pound rises as Boris Johnson plans 'significant' Brexit intervention

The pound rose on Monday on the back of a report claiming UK prime minister Boris Johnson was planning to once again personally intervene in Brexit talks.

Sterling rose against the euro and dollar in London following a report in the Telegraph suggesting Johnson will this week make a “significant” intervention.

Johnson will reportedly speak directly to European Commission president Ursula von der Leyen in a bid to “clear away final barriers” to a trade deal. Johnson has intervened in Brexit talks several times so far this year, going over negotiators’ heads to speak directly to von der Leyen.

Separately on Monday, Irish premier Micheal Martin said he was hopeful a deal could be done by the end of the week.

“There are texts now on all areas,” the Taoiseach told reporters in Dublin. “I would be hopeful that by the end of this week we could see the outline of a deal.”

Martin cautioned that it was “down to political will”.

The pound was up 0.5% against the euro to €1.1256 (GBPEUR=X) by 2.15pm in London. Sterling was up 0.8% against the dollar to $1.3392 (GBPUSD=X).

Trade talks between the UK and EU have been largely stuck at an impasse for months, with disagreement over key issues such as fishing rights and a so-called “level playing field”.

“Fundamental divergences still remain, but we are continuing to work hard for a deal,” Michel Barnier, the EU’s chief Brexit negotiator tweeted on Monday morning.

While recent reports suggest some progress has been made, there has been little sign of a break through on the key issues.

“For a few months it’s felt like a case of five steps forward and four back on the path to some kind of deal,” said Jim Reid, a senior strategist at Deutsche Bank. “So progress but painfully slow.”

Talks are set to resume virtually on Monday after members of the EU negotiating deal were diagnosed with COVID-19 last week. Face-to-face talks could resume on Thursday, the Telegraph said.

Both sides are running out of time to reach a deal that can be ratified in time for the end of the Brexit transition period on 1 January 2021. The Telegraph suggested next Tuesday is now the unofficial deadline for talks to conclude.

“In football parlance, we are in extra time and hoping to avoid going to penalties,” said Kit Juckes, a senior macro strategist at Societe Generale.

John Fahey, a senior economist at AIB, said the path for the pound would be determined by newsflow from negotiations and any outcome.

“From a sterling viewpoint, EU-UK trade talks remain a potential source of direction,” he said in a morning note sent to clients.

Juckes said the pound could reach $1.40 if a deal is confirmed or fall to $1.25 if Britain ends up with no deal.

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