GBP/USD sees 100 pip spike on UK PM’s “last ditch” push for a Brexit deal

• GBP/USD moves sharply higher to the upper 1.3400s on reports that the UK has made a new offer to the EU on fish.
• Market commentators speculate that the UK’s offer might hit a sweet spot that all sides can “live with”.

Reports from Bloomberg that the UK PM Boris Johnson is making a final “last-ditch” push for a Brexit with a new compromise on the issue of fisheries has spurred significant GBP upside in recent trade. GBP/USD spiked as high as 1.3496 from below 1.3400 prior to the news breaking. The pair still trades lower by around 0.4% or 60 pips on the day, however, as markets wait to see how the Europeans respond to this offer.

Brexit Update: 11th-hour deal?

At around 19:30GMT, Bloomberg reported that the EU is considering a new offer on fishing rights from the UK as PM Johnson reportedly looks to secure an “11th-hour” trade deal with the bloc. Under the new UK offer, EU would reduce the value of fish caught in UK waters by 35% over a five-year transition period, a big drop from demands last week that the EU reduce the value of their catch by 60%.

The report noted that the European Commission, which is conducting trade negotiations with the UK, is currently in liaisons with national governments regarding the new offer, particularly those with large fishing industries such as France, Demark and Spain. Over the weekend, the EU told British negotiators that is final offer was a 25% reduction in catch value after the bloc initially suggested 18%.

An offer of a 35% reduction for five years from the UK is likely to be highly tempting to many within the EU. Indeed, Politico’s Raoul Ruparel speculated in a widely circulated article earlier in the day that this exact offer could be a landing zone for a deal on fisheries that both sides could “live with”.

If the EU does accept the UK’s offer, does this mean there is a deal? Not quite, gaps reportedly still remain on many other issues, but significant progress was made at the start of last week on the issue of level playing field, prior to negotiations getting stuck on fisheries.

Whichever way you look at it, if the EU and UK can agree in principle on the issue of fish, one of the toughest road-blocks so far, there is nothing to say a deal cannot be reached. Reports earlier in the day suggested that the UK Parliament is primed to get a deal into law in record time if one is agreed by 30 December. Meanwhile, EU national leaders will be able to bypass the European Parliament initially in ratifying a deal (the European Parliament would confirm the ratification of the deal at a later date).