GBP / USD rises 100 pips after Prime Minister Boris Johnson’s latest attempt “to strike a Brexit deal

• GBP / USD is moving sharply higher to above 1.3400 following reports that the UK has made a new offer to the EU on fisheries.
• Market commentators speculate that the UK supply could reach a sweet spot that all parties can “live with”.

Reports from Bloomberg that UK Prime Minister Boris Johnson is making one last push for a Brexit with a new commitment on the fisheries issue have spurred a significant rise in sterling in recent trade. He GBP/USD it spiked to 1.3496 from below 1.3400 before the breaking news. However, the pair is still trading down around 0.4% or 60 pips on the day, as markets wait to see how Europeans respond to this offer.

Brexit update: last minute deal?

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

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

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

If the EU accepts the UK’s offer, does this mean there is a deal? Not quite, reportedly gaps still remain on many other issues, but significant progress was made early last week on the level playing field issue, before negotiations stalled on fisheries.

However you look at it, if the EU and the UK can agree in principle on the fish issue, one of the most difficult obstacles so far, there is nothing to say that an agreement cannot be reached. Reports earlier in the day suggested that the UK Parliament is poised to sign an agreement into law in record time if a deal is reached before December 30. Meanwhile, EU national leaders will be able to bypass the European Parliament initially by ratifying an agreement (the European Parliament would confirm the ratification of the agreement at a later date).