Pound Sterling Boosted as Barnier Agrees to Speed up Pace of Brexit Talks, Davis Hints at Concessions

Above: EU Chief Brexit Negotiator, Michel Barnier (C) European Commission.

The British Pound has caught a fresh bid on news that the EU's chief Brexit negotiator Michel Barnier is willing to speed up Brexit talks while the UK hints at fresh concessions.

The European Union's chief Brexit negotiator Michel Barnier has agreed to speed up the pace of negotiations and will release a revised agenda.

Barnier said the agenda and dates for the next round of Brexit talks would be set "in next few hours or days" according to a report carried on newswire Reuters.

This appears to be a positive response to requests by the UK for Brussels to agree to more face-to-face meetings in order to speed up the Brexit process and avoid a no-deal situation.

"Sterling extended its winning streak against the Euro to 5 sessions," says analyst Piet Lammens with KBC Markets in Brussels. "The lion's part of the Sterling gains followed comments of EU chief Brexit negotiator Barnier who said he is ready to speed up negotiations."

Bloomberg had reported earlier that Secretary for Exiting the European Union, David Davis has proposed a different structure to the negotiations in the hope that it will help both sides to make the necessary compromises on the divorce terms for talks to move on to trade.

The report, quoting an unnamed source, notes the UK wants more discussions on an ongoing basis and to move away from the current pattern of four-day sessions held once a month in Brussels. Regardless of the negotiating structure, only compromises on both sides will deliver the progress needed to break the logjam, the report noted.

Markets are bidding Sterling as they believe the threat of a no-deal has been reduced, however slightly.

"Something seems to be moving on the Brexit front. After the EU’s chief negotiator Michel Barnier signalled yesterday that he was willing to speed up the negotiations and that he was looking for dates with the British delegation," says Antje Praefcke at Commerzbank.

Furthermore, it has been confirmed that Brexit negotiations are to re-start on Wednesday November 8 with a visit to Brussels by Davis scheduled for Friday.

Negotiations will start on Wednesday next week and Davis will visit Brussels on Friday pic.twitter.com/Nu3p1MpEQQ

— BrexitCentral (@BrexitCentral) October 31, 2017

The developments are seen as being supportive for Sterling over coming days and weeks.

“We still forecast Sterling at $1.38 end-year ($1.40 end-2018). This may seem a stretch, but current levels ($1.32) encompass much bad news and any positive Brexit developments should support the Pound,” says Victoria Clarke, Economist with Investec in London.

Investec are forecasting the GBP/EUR to end 2017 at 1.15, where is expected to hover for the duration of 2018.

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Concessions

The Brexit narrative improved further on observations made by Davis when he appeared before a panel of UK lawmakers to answer questions pertaining to the current status of Brexit negotiations.

Davis conceded that the exit negotiations would probably favour the EU as far as “the money” was concerned (i.e. the bill) but that future relations would benefit both sides.

Davis said he was not about to make a “big offer” but conceded when agreement was reached it could be a sore point for the UK, although he did not put any likely figures on the table.

"The withdrawal agreement, on balance, will probably favour the [European] Union in terms of things like money and so on. Whereas the future relationship will favour both sides and will be important to both of us," said Davis.

The EU is still waiting on the British plans for the Irish boarder and citizens’ rights, "but at least there is a silver lining on the horizon," says Commerzbank's Praefcke.

UK Hits its Stride on Brexit Preparations

It has meanwhile been revealed that preparatory work for Brexit “has seen a significant acceleration in recent months,” according to a 10 Downing Street spokesperson.

Speaking to the media, spokesman James Slacks says almost 3,000 new jobs within the government have been created to support Brexit planning, including the recruitment of 300 additional lawyers while HMRC will take on as many as 5,000 extra staff next year.

Government departments are reported to be drawing up 300 separate programs for Brexit, he said.

“Each of these plans prepares the country for the range of negotiated outcomes and a ‘no deal’ scenario for a policy area affected by the U.K. leaving the EU. The plans set out detailed delivery timelines including, for example, to recruit and train new staff; to design and procure IT systems; and to deliver the necessary legislative and regulatory changes,” says Slack.