As Brexit negotiations continued to induce controversy over the weekend, Sterling is down considerably against both the U.S. Dollar and the Euro. During a defiant statement on Sunday, Boris Johnson vowed to not adhere to the EU’s “outrageous” demands, claiming to never give in to the “EU demands preventing us taking back control of the rules Britons live under”.
Cable finished last week strong, opening and closing on Friday comfortably in the 1.34 range. GBPUSD opened at 1.3461 and closed the week off at 1.3483. However, after a plethora of detrimental Brexit headlines over the weekend, the pair is now trading just above 1.32.
As for GBPEUR, much a similar story. The pair opened the session on Friday at 1.1071, and by the close had managed to gain some upside, finishing the week at 1.1105. Today the pair is marginally below that mark, trading now around the 1.0950 handle.
EU sources last night stated that a “major breakthrough” on fishing rights has been made between both sides, and the only thing left up for discussion was that Britain agree to follow EU laws. Sources in Brussels assert that “the two sides had all but finalised terms on the level of access for EU boats to seas within the UK’s 200-mile exclusive economic zone, with a transition period for phasing in changes understood to be between five and seven years”.
As we come to the latter stage of the talks, France and Germany have made clear to Michel Barnier that they are united on the need for the UK to face consequences over future divergence from the EU rulebook as policy changes. The EU is proposing that it should have the power to unilaterally hit British exports with tariffs in the event that Whitehall fails to follow Brussels’ upgrades to its regulations. Sources from the UK said that negotiations would collapse unless this demand was dropped within the next 48 hours. Frost and his team are instead offering to review the deal in an unspecified number of years to allow the terms of trade to be changed if there is significant divergence.
During a phone call on Saturday evening both Johnson and von der Leyen claimed to believe a “deal still can be done”. The two leaders will speak again this evening.
After an exciting week EURUSD on Friday experienced little volatility. The pair opened Friday at 1.2158, and closed just below that level at 1.2142.