The British premier had been preparing to unveil a new deal this week, but vocal opposition from unionists in Northern Ireland and Brexit hardliners in Sunak’s own Conservative Party scuppered the plan. Sunak had a positive talk with European Commission President Ursula von der Leyen late Friday and they will speak again soon, a person familiar said. He’s also gearing up to talk to his Cabinet before Monday, people directly involved in the plans said.

Sunak also wants to have further discussions with DUP Leader Jeffrey Donaldson, whose party has blocked the formation of Northern Ireland’s devolved power-sharing government for more than a year over the current post-Brexit trading arrangements, known as the Northern Ireland Protocol. His endorsement is likely to prove crucial and without it an announcement of the deal may be further delayed. 

Eoin Treacy's view

There are three potential solutions to the question of how the Good Friday Agreement fits into the overall Brexit question. The first is the border with the EU is in the middle of the Irish Sea. This is the current situation which Boris Johnson implemented.

That leaves Northern Ireland inside the EU. It creates a tariff/customs inspection headache between the mainland of the UK and Northern Ireland which is totally unacceptable to Unionists.

The second is the border would be between Northern Ireland and the Republic of Ireland. That introduces a customs border in direct contravention of the Good Friday Agreement which supersedes other agreements.

The third is the UK goes for Brexit-lite and accepts the EU’s rules. That would deliver Brexit in name only for anyone who voted for it. That option is obviously viewed with vitriol by Euro skeptics.

Boris Johnson went for option 1 because he championed Brexit. Rishi Sunak appears to be leaning towards option 3 because he is less loyal to the Euro skeptic part of the Conservative Party. The Labour Party is probably glad the Conservative Party is willing to tear itself apart over this issue.

It is a very hard pill to swallow that Brexit, as most people understand it, will not be delivered because of an agreement reached to end decades of sectarian violence and bombings. The alternative will be to completely cut ties with the Unionists in Northern Ireland and that would greatly enhance scope for a return to sectarian violence.

The Pound is rolling over against the Dollar and a clear upward dynamic will be required to check potential for additional downside.