(CNBC) Sterling jumps as UK and Irish leaders say there is a pathway to a possible Brexit deal

(CNBC)

  • U.K. and Irish leaders meet in North West England.
  • Both commit to a statement claiming “a pathway to a possible deal” on Brexit.
  • Sterling rises to a session high as reporters suggest movement from the U.K. on Irish customs checks.
GP: British Prime Minister Boris Johnson Meets Leo Varadkar In Ireland 190910 EU

British Prime Minister Boris Johnson (L) speaks to the media ahead of his meeting with Irish Taoiseach Leo Varadkar at Government Buildings on September 9, 2019 in Dublin, Ireland.Charles McQuillan | Getty Images News | Getty Images

The British pound rose sharply on Thursday after positive comments on Brexit from the leaders of the Republic of Ireland and the U.K.

U.K. Prime Minister Boris Johnson met with his Irish counterpart Leo Varadkar for further Brexit talks Thursday afternoon, with subsequent comments causing traders to buy the British pound.

Sterling rose to 1.2390 against the U.S. dollar by 4:55 p.m. London time after trading nearer $1.2218. It was up 1.3% versus the greenback for the session.

“The Prime Minister (Johnson) and Taoiseach (Varadkar) have had a detailed and constructive discussion,” the joint statement said.

“Both continue to believe that a deal is in everybody’s interest. They agreed that they could see a pathway to a possible deal.”

UK Prime Minister@10DowningStreet

PM @BorisJohnson’s joint statement with Taoiseach Varadkar.

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The statement was also tweeted out from the Twitter account associated with the Irish leader Leo Varadkar.

The meeting reportedly lasted more than three hours, with Johnson and Varadkar initially speaking alone.

Squaring the Brexit circle

Ireland is at the center of the Brexit debate because the United Kingdom has a land border on the Irish mainland between Northern Ireland and the Republic of Ireland to the south. The Republic is to remain in the European Union while Northern Ireland would leave as it is part of the United Kingdom.

Erecting a physical border between the two is problematic as it would contravene a peace treaty, known as the Good Friday Agreement. This treaty was put in place to help end a decades-long war that pitted Northern Irish unionist groups and the British state against different factions of the Irish Republican Army (IRA).

The backstop is an arrangement whereby Northern Ireland remains in the customs union — a common tariff area — until a solution can be found to prevent any return of physical checks on the border.

Including the Irish backstop in any U.K. withdrawal deal has drawn fire from opponents who see it as a means of trapping the U.K. within Europe.