The Brexit latest
Brexit updates across the news wires from the weekend were as negative as usual. Numerous times, however, the Pound had remained resilient until this week.
We saw the Pound slide by 0.85% on Monday to leave it down by 1.53% for September and back into the red for 2020.
On Sunday, the news wires reported that the UK’s chief negotiator said that the government is not afraid of walking away.
The key issues facing both sides currently remain EU access to UK fisheries and the elusive trade agreement.
David Frost’s message from the weekend should not have been a surprise for the markets at the start of the week.
The messaging from Frost and the British PM has been consistent throughout. No deal may ultimately be the best outcome rather than be entangled in too many EU rules.
Brexit talks are set to resume today and the Brexit clock is ticking more loudly by the day.
We saw both sides agree to extend talks to the end of September in a bid to come up with an agreement.
The two sides are now entering the 8th round of formal negotiations. If the rhetoric is anything to go by, it may be the last round of negotiations before Frost and Johnson call it a day.
Both sides have aimed to have a deal in place in place by the end of the month. Any agreement would then have to be signed off by both sides before the end of the transition period.
It’s hardly surprising that talks will likely be difficult once more. After all, the EU is asking for UK access to its fishing waters to be kept permanently low.
For the EU, this appears to be a deal-breaker. If the UK government cedes to the EU’s demands, this would almost certainly be catastrophic. It would be hard to imagine a government giving up its fisheries when the electorate voted to be independent of the EU.
No more Softly Softly
David Frost’s interview came at a poignant time as both sides return to the Brexit table.
Some muscle flexing for sure but this time around it looks as though the markets have taken his threat as a credible one.
The British government may in fact walk away without a trade agreement. Perhaps more importantly, however, they will be seen as doing it for the right reasons.
It will have been for reasons such as this that Britain voted to leave.
At the time of writing, the Pound was down by 0.18% to $1.31350. That’s quite a drop from the start of the month high $1.34832 that came off the back of Dollar weakness.
Expect updates from talks that resume today to have further influence. The Pound will remain on the defensive when considering the hurdles that lay in the way of an agreement.
Any negative chatter and we could see a return to sub-$1.30 levels before the end of the week. It could be even worse for the Pound should Britain walk away from the table, however.