27.02.202323:49 Forex Analysis & Reviews: Britain and the EU reach agreement on trade relations with Northern Ireland

Britain and the European Union have reached an agreement on trade agreements with Northern Ireland, ending more than a year of bitter disputes over the post-Brexit settlement in the region.

The agreement followed a meeting Monday between British Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen, according to people who wished to remain unnamed when discussing the deal, which has not yet been made public. The two sides are negotiating new terms to ease trade flows between Britain and Northern Ireland and end the biggest Brexit wrangle three years after Britain left the EU.

There will be a press conference, after which the prime minister will make a statement about the deal in the House of Commons. Later on Monday, von der Leyen will meet with King Charles III.

This is a triumph for Sunak, who has sought to reduce tensions with the EU since taking power in October. But there could still be danger ahead for the prime minister, who failed to convince unionists in Northern Ireland and Brexit supporters in his own ruling Conservative Party to approve the agreement last week.

The pound rose to a session high of $1,2030.

The agreement seeks to ease the trade and regulatory barriers created in the U.K. by the Northern Ireland Protocol, part of former Prime Minister Boris Johnson's Brexit agreement that defines the region's unique place in both U.K. and EU trade markets.

For the U.K. government, a revised deal was an outcome that sometimes seemed impossible and threatened to trigger a trade war as tensions rise in 2022. But now Sunak faces a serious domestic political challenge.

Last year, the Democratic Party blocked the power-sharing government in Northern Ireland to protest. Without the DUP's support for a new agreement, the risks of a constitutional crisis in the region persists.

While the agreement may not require a vote in the House of Commons, a process that ultimately led to Theresa May's ousting in 2019, Sunak promised to let MPs have their say, and his supporters have made clear they expect to get a vote.

In Sunak's view, gaining support for the deal would solve a problem that has hampered relations between London and Brussels since it was first drafted in December 2020.

There are broader implications as well. Three years after Brexit, Sunak recently privately asked a senior minister and officials to develop plans to rebuild the relationship, focusing on defense, migration, trade and energy.