Brussels fudge for breakfast

December 8, 2017

The Brussels fudge that May and Juncker have served up this morning has gone down a treat for sterling. The pound is trading up against almost all major partners, and has reached a six month high against the euro.

This morning’s deal looks like a classic eurozone can kicking exercise. It’s now clear that Britain is seeking an agreement on regulatory alignment that will mean the overarching UK wide deal will satisfy Northern Ireland’s requirements. But in the plausible scenario where such a deal is not reached, today’s fudge hinges on Britain coming up with unspecified “specific solutions” that will avoid a hard border in Ireland.

Regardless of any future difficulties, for now the news is very positive, and next week’s leaders’ summit will conclude in celebrations, which the pound has already kicked off this morning.

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