The British Pound is spiking on the latest Bloomberg headline-cum-trial balloon from the neverending Brexit process according to which PM Theresa May is ready to compromise with the EU and ditch one of her key demands in order to resolve the "vexed" issue of the Irish border and clear the path to a deal.
Specifically the UK would no longer demand that the backstop would be time-limited; Until now, May has insisted that a legal guarantee to ensure no new border emerges on the island of Ireland should be strictly limited in time.
May and pro-Brexit politicians in her Conservative party want an end date for the policy to avoid delaying the U.K.’s departure and to ensure the country is free from EU customs rules to strike its own trade deals around the world.
According to Bloomberg, the fix opens the possibility that "Britain would end up bound indefinitely to the European Union’s customs rules. While that’s something that the EU and many businesses want, it risks detonating a crisis in May’s government that could even bring her down."
The proposed backstop would in effect act as an insurance policy in case any future trade deal between the UK and EU fails to avert a need for customs checks at the Irish border.
In response to the headline, cable spiked as high as 1.3100...
... but several analysts caution about reading too much into the move, or the report, with the main concern being that May would have a very difficult time of getting her party to agree to the proposal considering how much acrimony the issue of the backstop has caused in recent weeks.
Furthermore, considering the relentless back and forth in the newsflow, with denials following trial balloons all week, it is quite possible that a headline emerges in the coming hours denying the whole Bloomberg article, and slamming cable back down.