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EU Parliament's Verhofstadt Hints at Progress in Brexit Talks

Verhofstadt and May meeting

Image © Crown Copyright

More positive developments on the Brexit front on March 13, this time from the European Parliament where it appears lawmakers are looking to push negotiations forward.

Guy Verhofstadt, the EU Parliament's representative in Brexit negotiations, has said "we are very near to a satisfying solution" for guaranteeing the rights of EU and UK citizens on either side of the English Channel following Brexit.

This suggests another stumbling blocks to the agreement of a Brexit transitional deal at the March 22-23 European Council meeting might have been cleared.

Verhofstadt has at times been highly critical of the UK's negotiating stance and his constructive tone just ten days ahead of the European Council summit adds to optimism that a deal can be done.

"On Brexit, it’s time to go beyond slogans & sound bites, from all sides. That’s what we do in this resolution. We present an architecture, a concept, a vision for the future, a plan that matches the red lines of the UK with the principles on which the EU has been built," Verhofstadt tweeted.

Verhofstadt added that the EU Parliament believes a future relationship should use the European Treaty, more precisely articles 8 and 217 that foresee the possibility to establish "in our neighbourhood" so-called Association Agreements, "deep & special partnerships with the countries with whom we share a common territory, a common history," says Verhofstadt.

The developments follow those of a junior UK Brexit minister who told a gathering at the Institute of Directors on March 12 that the UK and EU "are very close" to striking an accord on the transitional period.

"I want to stress that we are very close to a deal at this time," Robin Walker, who serves as Parliamentary Under Secretary of State at the Department for Exiting the European Union, told the gathering.

The news proved beneficial for Pound Sterling which started the new week as the best-performing major currency.

The Pound-to-Euro exchange rate climbed back above the 1.12 level and looks like it could make a move on the 1.13 pivot which is the level it has been trading around for six months now.

The Pound-to-Dollar exchange rate rose above 1.3850, but still remains some way off its 2018 highs just north of 1.43.

"Sterling bounces a tad higher as UK Brexit Minister Robin Walker says UK-EU are 'very close' to a Transition Deal. Near-term focus for GBP remains on the 22-23 March EU leaders summit – and the odds of a Brexit transition deal being struck this month. If agreed, GBPUSD to 1.40," says Viraj Patel an analyst with ING Bank.

The Daily Telegraph meanwhile published an article at the start of the week stating that UK is close to securing a transition deal at the upcoming EU Leaders’ Summit on the 22nd and 23rd March.

According to the report, the European Commission was “impressed” by the UK team during negotiations in Brussels last week.

One unnamed EU diplomat was quoted as saying “the UK was seriously prepared”, and that “it seems that let’s get on with it means let’s get on with it”. A second unnamed EU diplomat was quoted as saying “it is clear that the UK has a strong will to reach an agreement on a transition period”.

Lefteris Farmakis, an FX strategist at UBS Group, also sees the prospects for a firmer Pound on a transitional deal being struck:

“Both the prospect and the timing of a transitional deal on Brexit remain highly uncertain. If such a deal does take place, however, it could be an important positive development for Sterling in the near-term by reducing 'cliff-edge' risks."

Negotiators have until the March 22 European Council summit to agree on the terms of a transition period in order for it to be approved by heads of state from across the European Union at the summit.