About 1,000 Palestinian prisoners will be exchanged for 48 Hamas held hostages.
The first phase of a peace deal for Gaza is due to be signed this morning.
The US President announced the breakthrough shortly before midnight.
Negotiators representing Israel and Hamas agreed to the first phase of a US-backed peace plan.
That will see the release of around 1,000 Palestinian prisoners in exchange for the release of the remaining 48 hostages held by Hamas.
Former Army Ranger, and ex member of the Oireachtas Committee on Defence, Portarlington's Cathal Berry says the deal makes sense from an Israeli perspective but the next steps will be complicated:
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