Pound buoyed by Juncker's comments on possible Brexit deal

LONDON • The British pound extended its recent run yesterday after European Commission president Jean-Claude Juncker said a Brexit deal with the United Kingdom was still possible.

Mr Juncker said a withdrawal agreement could happen if the Irish border backstop, which the British government wants removed, could be replaced with alternatives.

"I think we can have a deal," Mr Juncker said in an interview with Sky News, adding that he did not know if the chances of a deal were more than 50-50. The contentious backstop - an insurance policy to keep the Irish border open and free of border controls under any circumstances after Brexit - has so far proven to be the main stumbling block in the tortuous Brexit talks.

Mr Juncker reiterated that he did not have a special attachment to the backstop if another solution was found in the negotiations.

"If the objectives are met, all of them, then we don't need the backstop," he said.

British Prime Minister Boris Johnson has vowed that the country would leave the European Union on Oct 31, with or without a deal, but British lawmakers have voted to force him to seek a delay to the departure if he cannot strike a new agreement with Brussels.

Mr Johnson's government has since stepped up efforts to try and renegotiate the deal agreed by previous premier Theresa May but repeatedly rejected by Parliament.

Irish Foreign Minister Simon Coveney echoed Mr Juncker's sentiment but cautioned that the gap was still wide, and he underscored the risks of a disorderly Brexit - civil unrest on the island of Ireland and a dislocation of trade. He said yesterday that London and the EU were not yet close to a deal that could resolve the Irish border riddle but added that the "mood music" had improved.

Building on overnight strength, sterling rallied as much as 0.5 per cent versus the US dollar to a two-month high in early trade, and it powered to a four-month peak versus the euro at 87.87 pence.

Sterling was last up 0.1 per cent at US$1.2538. It has risen from under US$1.20 earlier this month as investors slashed their bets against the pound because of perceived receding risks of a no-deal Brexit.

But some analysts think investors may be getting ahead of themselves. FXTM analyst Han Tan said: "It remains to be seen whether the pound can push on from current levels."

REUTERS

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A version of this article appeared in the print edition of The Straits Times on September 21, 2019, with the headline Pound buoyed by Juncker's comments on possible Brexit deal. Subscribe