Sterling rises as Barnier hints at Brexit deal this week

Michel Barnier

Michel Barnier: deal possible

Sterling jumped in London and hit a five-month high against the euro after the European Union’s chief Brexit negotiator said a Brexit deal was still possible this week.

The pound leapt by up to 0.7% to $1.2699 and made a similar gain against the euro at 86.3p.

The currency has enjoyed a huge rally since indications from the EU last week that a deal could be agreed at an EU Summit on Thursday and Friday.

Prime Minister Boris Johnson wants to strike an exit deal to allow an orderly departure on 31 October.

The main sticking point remains the border between EU member Ireland and Northern Ireland. Some EU politicians have expressed guarded optimism that a deal can be reached.

On the FTSE 100, shares with a big exposure to the UK economy rose sharply. Builders Barratt Developments and British Land were up about 6%, and Lloyds Banking Group and Royal Bank of Scotland rose more than 5%. Next, ITV and Ocado were also big risers.

The FTSE 250 of UK mid-cap stocks rose and European equity benchmarks extended their gains on the news.

Mr Barnier prompted the rise when he said it was “high time to turn good intentions [into] a legal text”.

Irish PM Leo Varadkar said talks were “moving in the right direction” as Mr Johnson spoke to French president Emmanuel Macron amid reports of “positive momentum”.

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