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THIS WEEK IN THE FOREX MARKETS
Trading Insider | 5th October 2020
British Pound at Risk on EU-UK Brexit Fissure, Trump Fights Covid
BREXIT PAIN TO INTENSIFY The British Pound may be in for a rough week as EU and UK negotiators buckle down for intensified talks as the December 31 expiration date of the transition period nears. As I’ve written about in July, the dispute over economically-strategic and politically-sensitive fishing grounds continues to be a major wedge widening the rift between Brussels and London. UK policymakers warned that the gap on fisheries with their European counterparts risks being “impossible to bridge”. EU chief negotiator Michel Barnier later pointed out that “persistent and series divergences” are characterizing Brexit talks. With so much still to resolve, UK Prime Minister Boris Johnson and President of the European Commission Ursula con der Leyen agreed to extend the talks by a month. Despite growing risks of a no-deal Brexit, the Prime Minister said that the country can “prosper mightily under those circumstances” despite growing risks of supply chain disruptions. Last week, the government warned that a lack of preparation in the case of a no-deal scenario could result in “100km” lines of trucks. Under the strain of the coronavirus pandemic, this would only amplify the economic costs. Talks are set to resume this week in London and will then continue next week in Brussels. The EU has stressed the need for a resolution either by the end of October or early November, so enough time is left for the bloc to ratify an agreement. Until then, the British Pound may become increasingly more sensitive to Brexit developments as the clock ticks. Read more...
