Above: Geoffrey Cox, the Attorney General. File Photo. Image © Pound Sterling Live, Parliament TV
- Malthouse Compromise killed off
- But, reports of progress on backstop being reported
- Pound Sterling is best performing major currency following reports of progress
A series of rumours that point to progress in Brexit negotiations appear to have triggered a strong rally in the British Pound over the course of the past 24 hours.
Markets picked on a number of reports that suggest the Prime Minister is shifting stance on the Irish backstop in order to get something both the EU and a majority in Parliament can accept.
Harry Cole, Deputy Political Editor of the Mail on Sunday is notable in feeding news through to the marketing, saying "it sounds like the Malthouse Compromise is dead. The Prime Minister made clear it wasn’t a goer to Cabinet and Hammond backed her up to say it would be inconceivable without an extension to A50. High Noon just got a little more tense."
The source appears to be a person privvy to Tuesday's regular cabinet meeting between the Prime Minister and her senior ministers.
The Malthouse Compromise being referred to here was a plan that saw the two opposing Brexit factions in the Conservative Party come together to put forward a new plan that would involve a redrafting of the contentious Irish backstop and an extension of the transition period until 2021. Crucially this plan would unite both 'remainers' and 'brexiteers' in the party and could therefore have a chance of passing through parliament.
The Malthouse Plan in itself suggested there was a way forward for the warring factions of the Conservative party to unite, but the problem the plan faced was that it was never really going to be accepted by the EU. Therefore, it was seen as fanciful thinking and if anything it would only contribute to the EU and UK splitting without reaching a deal on March 29.
The importance of recent headlines instead lie rather with a view that progress on a new backstop deal is in the offing.
The news is "suggestive that a new backstop deal with the EU is now imminent. PM was always going to dump Malthouse, but wanted to wait until the last minute in a bid to limit the ERG eruption," says Tom Newton Dunn, The Sun's Political Editor and a well respected source on Brexit developments.
Markets clearly think something is afoot:
The Pound-to-Euro exchange rate rallied a notable 0.70% to reach 1.1503 on the day; the day's low is located at 1.1408.
The Pound-to-Dollar exchange rate went a percent higher at 1.3044, with the day's low down at 1.2895.
Cole adds he senses the "faintest wisp of white smoke," as he is told by his sources "Downing Street and UK negotiators were “pleasantly surprised” at how well talks went yesterday and there is rapid movement behind scenes."
The talks being referred to are those held between EU negotiators and Brexit Secretary Stephen Barclay and Attorney General Geoffrey Cox.
Indeed, Cox was due to give a speech around mid-day today covering the legalities on any changes to the Brexit backstop deal, but it appears this has been delayed.
This again suggests that movement on Brexit is afoot, and if we look at the nature of Sterling's advance we can suggest it starts when markets got wind that the Attorney General was 'missing in action'. Barnier, Barclay and Cox are scheduled to meet again on Thursday, with lawyers on both sides said to be engaged in trying to agree an acceptable form of language to bridge the impasse.
It appears a series of small newswire reports have culminated in feeding a story that Brexit progress is being made which has yielded a steady rally in the value of the British Pound.
Ahead, May is due to meet European Commission President Jean-Claude Juncker on Wednesday.
Asked whether May had ruled the proposal out, her spokesman referred to a statement issued by the Brexit department on Monday night following talks between Brexit minister Stephen Barclay and EU negotiator Michel Barnier.
The statement said that the European Commission had engaged with the ideas put forward by Britain but raised concerns about "their viability to resolve the backstop."
"We agreed to keep exploring the use of alternative arrangements - especially how they might be developed to ensure the absence of a hard border in Northern Ireland on a permanent footing, avoiding the need for the backstop to ever enter force," the statement said.
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