The British Pound is up again on news of pending Brexit negotiation talks between the UK and EU.

Tunnel Talks

Q: What's the tunnel?

A: A place where there are no cameras, cell phones, computers, or other communication. No one wants any leaks until a deal is reached.

Green Light

“They are giving the green light at the moment,” according to one diplomat.

Even Donald Tusk is on board.

From Eurointelligence

It has been our experience - and that of Angela Merkel as well - that all important deals in EU politics happen at the last minute when they happen. Final deadlines matter, not procedural deadlines like October 17 or 19. The EU and the UK have until the end of the month to get a deal. Of course, they will need an extension to pass it. But, once a deal is done, that's a technical detail.

Maastricht was not settled by the officials who wrote the treaty, but by the political leaders who in the end compromised on areas where they previously said they would not. It is possible that Johnson compromises on the customs union. And that Varadkar will compromise on the length of the backstop. Or vice versa. Or both.

It is possible that the fragile parliamentary majorities in the UK may break down again. But the Brexit fatigue in the country is playing into Johnson's hand. If elections were to precede final ratification, Johnson's message to Get Brexit Done would be a better campaigning platform than Labour's pledge to negotiate yet another deal and put it to a referendum. Once a deal is done, Labour might have to consider its strategic options again. There is a case for supporting the deal and moving on, rather than promising another year or more of Brexit uncertainty.

Could other EU leaders still reject this deal? If Varadkar is happy, it would be hard for them to frustrate an agreement. It is the price EU leaders will have to pay for hiding behind the Irish prime minister so far.

And finally, perhaps the most important statement from Varadkar was the following: "I am now absolutely convinced that both Ireland and the UK want there to be an agreement that’s in the interests of Ireland and the UK, and the EU as a whole."

Revival of Theresa May's Deal?

NEW: The UK appears to be drifting closer back to the original aims of the Northern Ireland backstop, I understand. This is the message Michel Barnier delivered to EU27 ambassadors late this morning following his meeting with Brexit Secretary Steve Barclay

Tony Connelly @tconnellyRTE

NEW: Boris Johnson twice refuses to say Northern Ireland will leave the EU's Customs Union under the new pathway agreed with Varadkar. Instead, says: "The whole of the UK will be able to take full advantage of Brexit".

Very suggestive that the pathway looks like @RaoulRuparel's NI-only New Customs Partnership: ie, NI stays within the EU's customs orbit but is allowed full access to UK's new trade deals. This would need East-West checks.

Worth also remembering that Boris Johnson resigned from Theresa May's Cabinet in protest at the Chequers proposal, which included an NCP-type dual customs regime.

Tom Newton Dunn @tnewtondunn

Westminster voting intention:

CON: 35% (+1)
LAB: 22% (+1)
LDEM: 20% (-3)
BREX: 12% (-)
GRN: 6% (+1)

via @YouGov, 08 - 09 Oct
Chgs. w/ 01 Oct

Britain Elects @britainelects

Heading Towards the Tunnel

Senior EU source inside Barnier briefing confirms to @skynews that intense negotiations - aka "the tunnel" -  will now begin between EU and UK

Adam Parsons @adamparsons

The Guardian Live Blog reports

EU member states give permission for 'tunnel' negotiations, says Barnier

The UK government had been keen to open “tunnel” negotiations with the commission on the detail of a deal, and this will be seen as a sign that progress is being made with the EU. These intensive talks are now set to be held in the days before the summit on 17 and 18 October.

Permanent Trap?

That's all we know other than Johnson had to give in on something.

I presume this will not be the same deal Theresa May negotiated, but it will likely have some of those aspects. Ireland probably gave up something as well.

The details are subject to negotiation.

If there is a way for the EU to keep the UK in a permanent trap, the UK may as well stay in.

Negotiations have finally begun!

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD stays in daily range slightly below 1.0900

EUR/USD stays in daily range slightly below 1.0900

EUR/USD continues to move up and down in a narrow band slightly below 1.0900 in the second half of the day on Monday. The modest improvement seen in risk mood makes it difficult for the US Dollar to find demand and helps the pair stay in range.

EUR/USD News

GBP/USD treads water above 1.2900 amid risk recovery

GBP/USD treads water above 1.2900 amid risk recovery

GBP/USD is keeping its range play intact above 1.2900 in the American session on Monday. The positive shift seen in risk sentiment doesn't allow the US Dollar to gather strength and helps the pair hold its ground ahead of this week's key data releases.

GBP/USD News

Gold struggles to hold above $2,400

Gold struggles to hold above $2,400

Gold loses its traction and trades in negative territory below $2,400 after suffering large losses in the second half of the previous week. The benchmark 10-year US Treasury bond yield holds above 4.2% and risk flows return to markets, not allowing XAU/USD to rebound.

Gold News

Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews

Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews

Bitcoin trades around $68,000 early on Monday, less than 10% away from its all-time high of $73,777 on Binance. Ethereum ETF anticipation brews among traders and Ether investment products see inflow of over $45 million in the past week. 

Read more

Election volatility and tech earnings take centre stage

Election volatility and tech earnings take centre stage

The US Dollar managed to end the week higher as Trump Trades ensued. Safe-havens CHF and JPY were also higher while activity currencies such as NOK and NZD underperformed.

Read more

Majors

Cryptocurrencies

Signatures