Barnier ends market optimism with warning over ‘no-deal’ Brexit

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GBPUSD held steady Thursday even though Michel Barnier said the European Union must prepare for a no-deal Brexit.

"I think it's had a reasonably positive landing, we're getting a lot of constructive engagement, and. a lot of talk about the practical considerations rather than "in principle" dismissal, and I think that's valuable from our point of view", Raab told the Lordes EU Committee.

One of the biggest sticking points is the future regulation of the border between the Republic of Ireland, an European Union member, and Northern Ireland, which will leave the European Union as part of the United Kingdom.

"With (Other OTC: WWTH - news) no backstop, we will not be able to have an agreement".

After meeting British Brexit minister Dominic Raab in Brussels, Barnier hailed progress on some security issues but warned there were still major differences over protected geographical indicators like champagne and stilton - and Ireland. "It's essential to conclude negotiations, because - as I've said - with no backstop, there can be no agreement".

The UK Government and politicians from across the spectrum have rejected the EU's vision of a backstop that keeps Northern Ireland under European customs rules.

Brussels wants to show that the flow of goods from the rest of the United Kingdom into Northern Ireland is minimal, and that most of it comes via the Republic of Ireland.

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"This backstop is critical".

The backstop is a safety net agreed in December that guarantees an invisible border, though there is no agreement to this date on how it will work.

Raab said: "On Northern Ireland we remain committed to giving effect to the joint report, continuing the work on the potential solutions, working with Michel and his team on some of the issues he's raised and continuing to drive that forward".

Mr Raab promised any deal on the border would be "workable" for the nearby communities it would affect most.

In response to Barnier's latest comments, GBPUSD was barely changed after its Wednesday gains, suggesting the uptrend in the pair that began two weeks ago will likely extend higher.

"And ultimately on my side, I am stubbornly optimistic that a deal is within our reach - if both sides grasp the opportunity".

"... We need to find a solution to control the movement of goods without rebuilding the border between Northern Ireland and Ireland".

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