The Pound jumped more than one per cent against both the dollar and the euro, as forex traders bet on a possible agreement between the British government and the European Union. The rise came just as Prime Minister Boris Johnson was meeting with French President Emmanuel Macron in Paris.
Forex traders took well Macron’s words, which appeared to show unexpected opening upon the Irish backstop issue. Following the statement made by German Chancellor Angela Merkel yesterday, Macron said a solution to the backstop mechanism could be found within 30 days “if there is good will on both sides”.
The Sterling rose up to 1.2279 against the greenback (+1.1%) and up to 1.1077 against the single currency (+1.1%).
Nevertheless, the optimism by traders upon a possible agreement between the two parts could be excessive. In fact, president Macron poured cold water upon the idea of a new Brexit timetable, as wished by Johnson, stating the backstop mechanism remains “indispensable” and arguing that London must offer “visibility”.Some analysts still believe there is little chance of a workable alternative being found within this time frame. British Express wrote that ‘more cynical assessments suggest the offer may be an effort by Berlin and Paris to evade the blame for a no-deal Brexit’. In this case the baseline scenario is still for a parity between the sterling and the euro by 31 October, the official Brexit day.