The British Pound is up again on news of pending Brexit negotiation talks between the UK and EU.

Tunnel Talks

Q: What's the tunnel?

A: A place where there are no cameras, cell phones, computers, or other communication. No one wants any leaks until a deal is reached.

Green Light

“They are giving the green light at the moment,” according to one diplomat.

Even Donald Tusk is on board.

From Eurointelligence

It has been our experience - and that of Angela Merkel as well - that all important deals in EU politics happen at the last minute when they happen. Final deadlines matter, not procedural deadlines like October 17 or 19. The EU and the UK have until the end of the month to get a deal. Of course, they will need an extension to pass it. But, once a deal is done, that's a technical detail.

Maastricht was not settled by the officials who wrote the treaty, but by the political leaders who in the end compromised on areas where they previously said they would not. It is possible that Johnson compromises on the customs union. And that Varadkar will compromise on the length of the backstop. Or vice versa. Or both.

It is possible that the fragile parliamentary majorities in the UK may break down again. But the Brexit fatigue in the country is playing into Johnson's hand. If elections were to precede final ratification, Johnson's message to Get Brexit Done would be a better campaigning platform than Labour's pledge to negotiate yet another deal and put it to a referendum. Once a deal is done, Labour might have to consider its strategic options again. There is a case for supporting the deal and moving on, rather than promising another year or more of Brexit uncertainty.

Could other EU leaders still reject this deal? If Varadkar is happy, it would be hard for them to frustrate an agreement. It is the price EU leaders will have to pay for hiding behind the Irish prime minister so far.

And finally, perhaps the most important statement from Varadkar was the following: "I am now absolutely convinced that both Ireland and the UK want there to be an agreement that’s in the interests of Ireland and the UK, and the EU as a whole."

Revival of Theresa May's Deal?

NEW: The UK appears to be drifting closer back to the original aims of the Northern Ireland backstop, I understand. This is the message Michel Barnier delivered to EU27 ambassadors late this morning following his meeting with Brexit Secretary Steve Barclay

Tony Connelly @tconnellyRTE

NEW: Boris Johnson twice refuses to say Northern Ireland will leave the EU's Customs Union under the new pathway agreed with Varadkar. Instead, says: "The whole of the UK will be able to take full advantage of Brexit".

Very suggestive that the pathway looks like @RaoulRuparel's NI-only New Customs Partnership: ie, NI stays within the EU's customs orbit but is allowed full access to UK's new trade deals. This would need East-West checks.

Worth also remembering that Boris Johnson resigned from Theresa May's Cabinet in protest at the Chequers proposal, which included an NCP-type dual customs regime.

Tom Newton Dunn @tnewtondunn

Westminster voting intention:

CON: 35% (+1)
LAB: 22% (+1)
LDEM: 20% (-3)
BREX: 12% (-)
GRN: 6% (+1)

via @YouGov, 08 - 09 Oct
Chgs. w/ 01 Oct

Britain Elects @britainelects

Heading Towards the Tunnel

Senior EU source inside Barnier briefing confirms to @skynews that intense negotiations - aka "the tunnel" -  will now begin between EU and UK

Adam Parsons @adamparsons

The Guardian Live Blog reports

EU member states give permission for 'tunnel' negotiations, says Barnier

The UK government had been keen to open “tunnel” negotiations with the commission on the detail of a deal, and this will be seen as a sign that progress is being made with the EU. These intensive talks are now set to be held in the days before the summit on 17 and 18 October.

Permanent Trap?

That's all we know other than Johnson had to give in on something.

I presume this will not be the same deal Theresa May negotiated, but it will likely have some of those aspects. Ireland probably gave up something as well.

The details are subject to negotiation.

If there is a way for the EU to keep the UK in a permanent trap, the UK may as well stay in.

Negotiations have finally begun!

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD clings to 3.5-week’s high, trades above 1.1000 figure

The pair is challenging the 1.1047 resistance. EUR/USD bull recovery from 34-month lows remains intact. Further coronavirus headlines are awaited.


GBP/USD hits new 2020 low and bounces amid Brexit rhetoric, coronavirus headlines

GBP/USD is trading above 1.2800 after hitting a new 2020, nearing the 1.2700 figure, as concerns about a no-trade-deal Brexit are weighing on the pound. Modest recovery seen in USD during the American session keeps the bearish pressure intact.


XAU/USD tumbles near two-week’s lows, sub-$1600/oz

Gold has been dropping sharply this Friday while reaching the 200 SMA on the four-hour chart. XAU/USD bulls gave up as sellers took the market down sharply. The bears seem to be in charge and more down could potentially be expected. 

Gold News

WTI remains under pressure around $45.00

Nothing new around crude oil prices, with rising concerns on the Chinese COVID-19 and its potential impact on the economy and the demand for the commodity keeping traders’ sentiment well depressed.

Oil News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors