Tuesday 7 July 2020 4:56 pm

Sterling rises to three-week highs on news of Brexit negotiations dinner

Sterling rose to three-week highs following news that the UK’s chief Brexit negotiator would meet with Michel Barnier ahead of the next round of trade talks.

A Downing Street spokesperson today said David Frost will tonight have dinner with Barnier at Number 10 this evening to discuss some of the trickier parts of negotiations.

Read more: Brexit: David Frost and Michel Barnier to have Downing Street dinner

These include EU access to UK fishing waters and business competition regulations.

Fishing policy has been a a major flashpoint in Brexit talks with EU member states pushing to retain the same access to UK fishing waters as they had when Britain was part of the bloc.

The news has “lifted the currency, providing a bit of hope in a situation that seems pretty damn dire for those wanting to avoid a no-deal feature,” said Spreadex analyst, Connor Campbell.

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The pound strengthened almost one per cent against the euro to 89.745p, while it rose to as high as $1.2579 against the dollar.

The dinner between the Brexit negotiators will be seen as an opportunity for both sides to clear issues in an informal setting. The Prime Minister has previously said he wanted the parameters of a deal finished before the end of the month, ahead of the end of the transition period on 31 December.

Read more: Johnson says he’s more optimistic than Barnier on post-Brexit trade deal

However some investors remain cautious, with some bearish bets on sterling, given there has been little progress in Brexit talks thus far.

Nomura analysts are currently targeting the pound to slip to 92 pence against the euro.

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