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Pound climbs as UK business secretary talks Brexit trade deal 'progress'

Lianna Brinded
·Head of Yahoo Finance UK
·2-min read
UK Business Secretary Alok Sharma. Photo: Leon Neal - WPA Pool/Getty Images
UK business secretary Alok Sharma. Photo: Leon Neal/WPA Pool/Getty Images

The pound has continued to make a steady climb against the US dollar (GBPUSD=X) on Wednesday, after the UK business secretary Alok Sharma provided updates on the nation’s “progress” on sealing a Brexit trade deal with the European Union (EU).

Sharma said, in an interview with Sky News: “I hope that we will end up with a free trade agreement.”

“We have made progress but there is still some way to go and we need to make sure that the EU understands that the UK is a sovereign nation and that’s the basis on which our arrangement with the EU is in the future,” he added.

The pound against the dollar moved up for another consecutive day, up 0.18% reaching $1.32:

Chart: Yahoo Finance
Chart: Yahoo Finance

Britain fully leaves the European Union on 31 December 2020. The UK is still in negotiations with the EU over a number of issues from trade and migration, to fishing rights. If the UK does not seal a wide range of agreements with the EU, it will be forced into a no-deal — or hard — Brexit.

Sealing trade deals with major economies is high on the agenda for the UK government because it’ll lose all the favourable conditions with its biggest trading partner — the EU — when it stops being a member.

Watch: What happens if no Brexit trade deal is struck?

But the Northern Ireland aspect of the deal has become a sticking point for negotiations.

The fear is that without an agreement with the EU, there could be the creation of a hard border with customs, security and passport control between the UK's Northern Ireland and the Republic of Ireland.

READ MORE: Autumn clothing pushes UK inflation higher in October

It is deemed as unacceptable as it poses a threat to the balance brought by the 1998 peace process that ended 30 years of conflict between Irish Catholic nationalists and pro-British Protestant unionists.

On 11 September, the UK government announced that it had secured its first post-Brexit trade deal, with Japan.

Watch: Why can't governments just print more money?