Investing.com - The 27 EU member states formally endorsed the new Brexit deal at the European Summit Thursday afternoon, meaning that the deal negotiated between the EU and the U.K. has officially been accepted by Europe.
European Council President Donald Tusk officially endorsed the agreement reached between the U.K. and the EU’s Brexit negotiating teams on Thursday afternoon during the European Summit.
In a press conference between Tusk and European Union Commission President Jean-Claude Juncker, Tusk said that the deal had been positively assessed by the European Commission and served to avoid chaos and conflict between the U.K. and the EU27. Tusk said they were now waiting for the votes of parliament.
Markets rallied on Thursday morning after Johnson and Juncker announced an agreement had been reached via their respective Twitter accounts.
At 17:00 GMT, GBP/USD was up 0.2% to 1.2857.
The pound soared to reach a five-month high of 1.2935 earlier in session, however volatility remained as the Brexit deal will still need to be passed by U.K. parliament on Saturday.
Johnson needs 320 votes from the 650 seat parliament to get his deal approved.
MPs rejected Prime Minister Theresa May's Withdrawal Agreement three times, however the main objection against May's deal was the Irish backstop - something ministers feared could trap the U.K. permanently in a customs union with Europe.
Boris Johnson's trump card will be that he has forged a deal with the EU that does not appear to include the Irish backstop.
The deal agreed will see Northern Ireland remain in the UK’s customs territory, thus benefiting from U.K. trade policy. However, as an entry point to the EU's single market, U.K. authorities will apply EU tariffs to goods coming from third countries only if the goods are at risk of entering the single market, otherwise U.K. tariffs will apply.
Every four years the Northern Irish assembly in Stormont will decide by a simple majority whether to keep with the status quo.
Northern Ireland's Democratic Unionist Party, which propped up Theresa May’s government, said it remains opposed to the agreement, making it uncertain if the new Withdrawal Agreement will be passed. Its 10 seats could be crucial to pass Johnson’s deal in parliament.
The DUP released a statement on Thursday afternoon saying it was "unable to support the government in parliament". However, Johnson may have already gambled on not getting the DUP's support in the hope he can win votes elsewhere.
The PM will need to command the support of the 287 Conservative MPs in parliament, while he will also try to win back the support of the 21 former Conservative MPs who were either deselected or defected last month.
The promise of no backstop and assurance that the U.K. will have left the EU by Oct. 31 might be enough to convince the hard-Brexiteer faction of the party. Moderate Conservatives, including the ousted 21, who also voted for Theresa May's deal, may also be inclined to vote for it as it delivers an orderly exit.
He will need to bridge the gap to reach the required 320 votes by winning over Brexit supporters and moderates from the opposition benches by promising that this is an opportunity to get Brexit done by the end of the month, putting an end to the Brexit debacle which has enveloped the country for more than three years.
Johnson could also make it clear that it is his deal or an extension which could lead to further uncertainty and still result in no deal.
The main opposition Labour Party, with 244 seats will likely vote against the Withdrawal Agreement with leader of the Labour Party Jeremy Corbyn calling Johnson's deal "even worse than Theresa May's". However, the government could see some support from rebel Labour MPs who represent constituencies that voted overwhelmingly for Brexit. The Scottish National Party has refused to support the deal.
The House of Commons passed a motion on Thursday afternoon, tabled by Oliver Letwin, which will allow amendments to the bill from the opposition. That means that the Labour Party's attempts to put Brexit or the deal back to a second referendum could have some traction.
If Johnson loses on Saturday, he is required by law to request an extension beyond the Oct. 31 date from the European Union.
The FTSE 100 closed up 0.20%, while the mid-cap FTSE 250 closed up 0.16%.