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Pound jumps after Britain and EU agree draft text for political declaration on future ties after Brexit

The pound has jumped this morning following the news that the European Commission and UK negotiators have agreed a declaration on the future relationship between the two sides after Brexit.

Reuters reported an EU official as confirming that the draft declaration had been agreed. It will now be inspected by national envoys of the remaining 27 EU member states at a meeting in Brussels on Thursday.

The pound has risen nearly one per cent to hit $1.2893 after the agreed draft declaration stated that both sides will have "a trading relationship on goods that is as close as possible".

TheCityUK chairman John McFarlane said May's deal was "infinitely better" than a no-deal Brexit. 

“This has been recognised and the financial markets are telling us strongly about it,” McFarlane said at the lobby group’s annual conference.

Director general of the British Chambers of Commerce Adam Marshall added: “While we welcome the fact that more flesh has been put on the bones of the proposed future UK-EU relationship, the reality is that the clarity and precision businesses need to plan for the long term can only be delivered when the details are hammered out and fully agreed. There are still big questions to answer – including whether businesses will be able to conduct trade between the UK and the EU without significant new barriers or costs."

He continued: “For business, this is just the end of the beginning of the Brexit process. Our trading firms will be paying close attention to what happens next, particularly as the proposals are debated in parliament over the days ahead. Businesses remain deeply concerned about the potential for a political stand-off that leads to a messy and disorderly exit from the EU next March."

In recent days Spain threatened to vote against the Brexit deal unless it received assurances that any talks regarding the status of Gibraltar would be separated from future talks between the UK and the EU.

However, despite the outstanding disagreement over Gibraltar, it is hoped the draft on the future relationship will be approved at a crunch summit in Brussels on Sunday, along with the draft withdrawal agreement.

European council president Donald Tusk tweeted that the draft declaration had been agreed "in principle at a political level".

German chancellor Angela Merkel has said she will do everything to reach an agreement on Brexit and that a disorderly Brexit remains the worst outcome.