Barnier says Brexit deal 'realistic' within 8 weeks

The European Union’s chief Brexit negotiator Michel Barnier has sent markets into a frenzy for the second time in as many weeks after saying it is “realistic” to expect a Britain to seal a deal with the bloc within the next two months.

“I think that if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within 6 or 8 weeks,” he said in a speech at an international conference in Bled, Slovenia.

“Taking into account the time necessary for the ratification process, the House of Commons on one side, the EuropeanParliament and the Council on the other side… we must reach an agreement before the beginning of November. I think it is possible.”

The UK Embassy in Slovenia also reported the significant comment on its Twitter account.

His words saw sterling leap to a five-week high against the dollar (GBPUSD=X) at over $1.30 and a one month high against the euro (GBPEUR=X) at 88.96p.

“It just shows that’s the key thing that people want to see Brexit progress,” said ING analyst Viraj Patel.

Barnier also sparked a wave of optimism amongst markets last week when he said the EU was ready to offer “a partnership with Britain such as has never been with any other third country.”

But the positive reaction was short lived – the French politician delivered a fresh warning about the continuing possibility of a ‘no-deal’ Brexit just hours later.

MORE: Barnier ends market optimism with warning over ‘no-deal’ Brexit

Barnier also said Monday that the Withdrawal Agreement was now up to 85% complete, with the “main risk for failure” an inability to agree on a backstop solution to avoiding a hard border in Ireland.

The original deadline for a deal was the European Council on October 18, but it is now widely accepted that negotiations, which are now taking place weekly, will run into November.

That would leave just enough time for a deal to be agreed by politicians on the UK and EU side before Brexit comes into force next March.

A special EU leaders’ summit would have to be convened to sign-off the deal if talks run beyond October.

Barnier’s optimism about the prospects for a deal are not shared by senior German MEP Elmar Brok, an ally of Angela Merkel who sits on the European Parliament’s Brexit steering group.

“A ‘no-deal’ scenario has never seemed more likely,” he told European Parliament magazine.

MORE: Brexit talks ramped up to once a week until the deadline for a deal