Israel and Hamas have reached a deal for the release of all hostages held by the militant group in Gaza, a major step toward ending a two-year war that’s devastated the Palestinian territory and triggered multiple conflicts in the Middle East as well as protests across the world.

The agreement was reached early on Thursday after several days of indirect negotiations between the warring sides in the Egyptian resort of Sharm El-Sheikh. The ongoing talks were brokered by the US, Egypt, Qatar and Turkey and based on a plan unveiled by US President Donald Trump last week.

“I am very proud to announce that Israel and Hamas have both signed off on the first Phase of our Peace Plan,” Trump said in a social media post Wednesday.

All 48 hostages held in Gaza — 20 of which Israel believes are alive — will be freed “very soon” and Israeli forces will “withdraw their Troops to an agreed upon line as the first steps toward a Strong, Durable, and Everlasting Peace,” Trump said on social media.

He later told Fox News the captives will “probably” be released on Monday.

Israel and Hamas both confirmed the deal. Crowds began gathering on Thursday morning in Hostages Square in Tel Aviv — a focal point for Israeli demonstrators calling for their release — to celebrate. There were also celebrations in Deir al-Balah in central Gaza, according to witnesses.

An Israeli official said the plan would start to be implemented from midday local time, with the army beginning to withdraw from their positions in the following 24 hours. The security cabinet will meet at 3 pm and the full cabinet shortly after to formally approve the agreement, the official said, asking not to be identified by name discussing sensitive matters.

The Israeli shekel rose around 0.3% to 3.26 per dollar in early trading. That extended its gains over the past two weeks — the currency has risen to the strongest level in more than three years on the prospect of an end to a conflict that’s seen Israel’s borrowing and budget deficit soar.

As part of the deal, Israel is meant to release around 2 000 jailed Palestinians and allow a ramp up of aid supplies to Gaza through United Nations agencies and other international bodies. Israeli forces will withdraw in steps until they reach a buffer zone just within Gaza’s border.

The talks in Sharm El-Sheikh are likely to continue over those issues, as well as the reconstruction and future governance of Gaza. Trump and Israeli Prime Minister Benjamin Netanyahu have demanded that Hamas disarms and have no part in governing Gaza, a territory it has ruled since 2007. The group, designated a terrorist organisation by the US, European Union and others, is yet to agree to that.

Netanyahu, whose government has long sought the total destruction of Hamas, hailed “a national and moral victory for the State of Israel.” He said he had a “very emotional and warm conversation” with Trump in which they congratulated each other on the “historic achievement.”

Hamas said the deal amounted to an “end to the war on Gaza” and will “ensure the withdrawal of the occupation forces,” according to a statement on Telegram. It thanked the mediators and, in a notable shift in tone, said it valued “the efforts of US President Donald Trump.”

The group called on Trump to ensure Israel sticks to the terms and added it would “never relinquish our people’s national rights until freedom, independence, and self-determination are achieved.”

Hamas triggered the conflict with an attack on southern Israel on October 7, 2023, killing 1 200 people and abducting another 250. More than 67 000 Gazans have been killed in the ensuing war, according to Gaza’s Hamas-run health ministry. A panel backed by the UN said Israel was committing genocide, something Netanyahu’s government strenuously denies. A UN-backed monitor declared a famine in parts of the territory.

Some 450 Israeli troops have died in combat in Gaza.

The conflict had ramifications beyond Gaza, with Israel exchanging fire with regional foes at several points since the start of the war in Gaza. Yemen’s Houthis have struck Israel and ships in the southern Red Sea with drones and missiles, pushing up global freight rates and disrupting trade. As well as in Yemen, Israel has attacked Iran-backed militias in numerous countries including Qatar, Lebanon and Syria. The Jewish country fought a 12-day aerial war against Iran in June, which saw the US strike Iran’s nuclear sites.

There have been regular demonstrations in the US, Europe and Muslim world, with Israel increasingly isolated. Some members of the EU, Israel’s main trading partner, have called for sanctions against the country.

If the agreement holds, it would be a diplomatic victory for Trump and may even boost his campaign to win the Nobel Peace Prize. The winner is announced on Friday.

Trump said he might go to the Middle East on Saturday or Sunday.

“I’ll be going to Egypt, most likely,” Trump said, adding that he’d go “maybe before the hostages are released or shortly thereafter.”

In an interview later with Axios, the US president said he’s likely going to go to Israel as well, and raised the possibility of speaking in front of the country’s parliament, the Knesset.

Next Steps

Trump’s son-in-law and confidant Jared Kushner and Middle East envoy Steve Witkoff arrived in Egypt on Wednesday to be part of the negotiations. Israel’s team is led by Strategic Affairs Minister Ron Dermer, one of Netanyahu’s closest advisers.

Hamas’ team is headed by Khalil Al-Hayya, who Israel tried to assassinate less than a month ago with a missile strike on Qatar. The attack, which killed other Hamas members and a Qatari security guard, angered Arab states and frustrated the US, with Trump pledging not to allow Israel to carry out similar actions again.

Following that strike, Trump met Arab officials in New York, with the discussions proving crucial to getting the US to the point of proposing a peace plan likely to be accepted by both sides.

Trump unveiled his 20-point proposal on September 29 at the White House alongside Netanyahu, who gave his backing. Last Friday, Hamas said it would release the hostages but wanted to negotiate other points.

The plan — which may change in light of those discussions — says Gazans will be encouraged to stay, moving away from the US president’s highly-controversial idea of driving the Mediterranean land’s two-million people into exile and turning into a “riviera.”

The issue of Palestinian statehood has come to the fore in recent months. Israel insists it can’t happen because it would risk another October 7-style attack on the Jewish state. That, as well as Israel announcing more Jewish settlements in the West Bank, has made the prospect of independent state of Palestine implausible for the foreseeable future.

Yet several of Israel’s key allies, including France, the UK, Australia and Canada, recognised Palestinian statehood last month as part of the UN General Assembly.

Trump’s plan doesn’t say a two-state solution is needed, but recognises “self-determination and statehood” are “the aspiration of the Palestinian people.”

While the deal is a first step toward what Trump has said he hopes is a lasting peace between Israel and the wider Arab world, many questions remain about whether a ceasefire can hold.

“There’s plenty of reason to be sceptical here about whether this would not make it past its initial stage,” said Yousef Munayyer, head of the Palestine/Israel Program and senior fellow at the Arab Center Washington DC.

Finalising the roster of Palestinian prisoners to be released could prove protracted. Some members of Netanyahu’s coalition, the most right-wing and religious in Israel’s history, will likely oppose the inclusion of planners of suicide bombings or of Palestinians who took part in the October 7 attack.

Another point of contention will be Trump’s proposal for a “Board of Peace” — chaired by Trump and including former UK Prime Minister Tony Blair — to oversee a “technocratic, apolitical Palestinian committee” that will run Gaza for a transitional period.