British Pound Climbs Higher on Possible Single Market Access

The British pound traded at its strongest level against the euro since September 6 on Thursday. The sterling received a positive lift from news of possible budget contributions that the United Kingdom might be willing to offer the European Union to keep its access to the single market.

In a statement that was made earlier today, Secretary of State David Davis said that the UK is willing to support the budget of the European Union in exchange for maintaining the nation’s access for goods and services to the European single market.

Such a deal would not be the first of its kind, the European Union previously gave access to the single market for countries outside the bloc in exchange for contributions to the union’s budget. However, this access also required these countries to accept EU Citizens freedom of movement that is applied within the bloc, an unfavorable option for the UK government.

The British government will likely find it hard to convince EU leaders to accept its contributions to the union’s budget without signing up to free movement of people. Malta Prime Minister Joseph Muscat, whose country is currently the president of the European Union, said on November 28 that the freedom of movement is an inseparable part of the access to the single market.

Securing access to the EU market is absolutely essential for many businesses in the UK. Most food producers and retailers of the nation can only stay competitive within Europe if they have an access for their goods that is free of tariff.

EUR/GBP dropped to 0.8441 as of 16:42 GMT on Thursday, after touching 0.8369 at 14:02 GMT, the pair’s lowest level since September 6. EUR/GBP started trading today at 0.8525.

GBP/USD touched 1.2583 after rising to 1.2693 at 13:57, its highest level for the day. The pair started the day off at 1.2505.

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