Investing.com - The pound briefly surged above the $1.28 level on Wednesday afternoon as Irish broadcaster RTE reported that the Northern Irish Democratic Unionist Party had accepted the U.K.'s latest Brexit proposals.
Europe editor for RTE Tony Connelly tweeted that two senior EU sources said the main stumbling block to a deal had now been removed as the DUP had accepted the latest proposal relating to consent. The support from the Northern Irish party increased optimism that a deal between the European Union and the United Kingdom could now be reached.
Connelly wrote: "Breaking: two senior EU soruces say the main stumbling block to a deal has been removed with the DUP accepting the latest proposals on consent...Optimism a deal can now be done..."
It was hoped a proposal for a deal would be in place before the European Summit on Thursday, however the Irish prime minister Leo Varadkar hinted on Wednesday morning that another Summit may have to be called before the official exit date of Oct. 31. U.K. parliament will sit on Saturday, the day before Johnson is legally obliged to ask for a Brexit extension if a deal has not been reached.
At 12:55 GMT, GBP/USD was flat at 1.2788, having fallen from session highs of 1.2839 following the news about fresh optimism surrounding a Brexit deal. EUR/GBP was a touch higher at 0.8632, up from a session low of 0.8599.
The pound pared its sharp gains after DUP leader Arlene Foster denied the claims her party had changed its position on consent. Foster responded to Connelly on Twitter saying: "EU sources are talking nonsense. Discussions continue. Needs to be a sensible deal which unionists and nationalists can support." Another source said that Downing Street agreed with Foster.
The U.K. submitted proposals to the EU on Wednesday morning, however details about what is in the text have not been officially released as talks are still ongoing.
U.K. prime minister Boris Johnson will brief Cabinet on the terms of deal at 13:30 GMT, while the EU's chief Brexit negotiator Michel Barnier will brief ambassadors of the 27 European member states at 15:00 GMT.