Sterling and share prices were generally higher today ahead of a crunch Brexit briefing tomorrow by Prime Minister Theresa May.
She will report to her Cabinet on Tuesday about the progress toward a deal ahead of Britain’s official date to leave the European Union on 29 March, with special reference to the problem of the border between the Republic of Ireland and Northern Ireland.
The blue-chip Index in London was 0.35% higher this morning at 7,118.69, although the FTSE 250, which is more focused on the domestic economy, was 0.73% down at 19,185.02.
Irish border is key issue
Against the euro the pound was 0.33% higher at €1.1424, while against the it stood at $1.2995, a rise of 0.22%. Against the , it was 0.25% higher at 147.1450 yen.
November is supposed to be a crunch month for Brexit talks, with a special summit being called to finalise details of Britain’s withdrawal agreement. But while Mrs May and her supporters say a deal is 95% in the bag, others put the chance of success at not better than 50-50.
One answer to this problem would be to leave Northern Ireland in the EU’s customs union while the rest of the UK pulls out. But this would, in effect, create a border down the middle of the Irish Sea, which is unacceptable to the Northern Irish unionists, upon whom Mrs May relies to keep her government in office.
A no-deal Brexit
An alternative would be to keep the entire UK in a customs union for a limited period of time while a trade deal is worked out between Britain and the EU. But both the Irish Republic and the EU reject the notion of a time limit, saying the so-called backstop would need to remain in place until a deal is done.
If they fail to seal a deal with the EU, Britain could leave without any deal and revert to trading with the remaining 27 countries under World Trade Organisation rules. But this could involve rebuilding customs posts and other facilities that were taken down decades ago.
For traders, the market effects of Brexit have been hard to predict. The index hit a recent low of 6,021.0898 on 17 June 2016, just ahead of the referendum. Yet, it saw a recent peak of 7,778.79 on 18 May 2018.
But has had a much harder time, falling from $1.4622 ahead of the referendum on 27 May 2016 to $1.2167 on 10 March 2017.