Brexit Trade Talks Set to Go to the Wire… Again
We head into another weekend after yet another week dominated by news about Brexit and the ever elusive UK-EU trade deal.
Last Sunday, 13 December, after a week where negotiations looked like they had all but broken down, an agreement was reached by both sides to continue talks beyond their self-imposed deadline.
The extension breathed confidence into the markets this week, causing the British pound to reach its highest level against the US dollar since 2018, as investors bet on the increased likelihood of a trade deal.
However, we go into this weekend amidst just as much uncertainty as the last. The European Parliament has said that a deal must be reached by Sunday in order for there to be sufficient time for it to then be ratified before 31 December - the date at which the UK’s transition period will end.
Thursday afternoon and evening saw various unencouraging rumblings from both sides of the negotiations. Ursula von der Leyen released a statement saying that bridging the remaining “big differences” will be “very challenging”.
Boris Johnson said that a no deal scenario was looking “very likely” unless the EU “substantially” changed their position. The UK’s chief negotiator Lord Frost added that “progress seems blocked and time is running out”.
Talks will resume today, Friday, and no doubt continue through the weekend. Following the statements late on Thursday, the British pound lost ground against both the US dollar and the Euro.
A close eye will have to be kept on how the talks develop as this will shape how the British pound fares throughout today and on Sunday evening when the Forex markets reopen.
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