U.S. Markets closed

The pound is rallying on a highly uncertain Brexit deal

John Detrixhe

The British pound jumped to its highest level in five months as news emerged that the UK and EU had reached a divorce deal. Traders may not have long to celebrate, however, as it’s still highly uncertain whether the British parliament will approve the Brexit agreement when it meets on Saturday.

Pound sterling rose more 1% in earlier trading, the highest since May, before falling back slightly to $1.2875. The currency has been battered since Brits voted to leave the bloc in 2016, at one point touching its weakest level versus the dollar since 1985.

Negotiators for the two sides have been working feverishly in Brussels to come to an agreement. European Commission president Jean-Claude Juncker described the deal as “fair and balanced.”

It isn’t over yet. A crucial test remains in the UK, where prime minister Boris Johnson must convince the House of Commons to get behind it. Johnson relies on the Democratic Unionist Party for parliamentary support, and the group hasn’t signaled that it would sign off on the agreement. A chief concern for the Northern Irish party is the formulation of a customs arrangement, which would see Northern Ireland treated differently than the rest of the UK. The worry is that they could become locked in an arrangement that pulls Northern Ireland toward the EU and away from the rest of Britain, according to a BBC report.

Johnson, meanwhile, has lost a number of crucial votes since coming to office this summer. His predecessor, Theresa May, also had an agreement with the EU, but it was defeated three times in the House of Commons. It promises to be an immensely important weekend for parliament, which will discuss the agreement during its first Saturday debate since the Falklands crisis in 1982.

 

Sign up for the Quartz Daily Brief, our free daily newsletter with the world’s most important and interesting news.

More stories from Quartz: