Boris Johnson started the most significant week of his political career yesterday, his plans for Brexit rest in the balance, negotiations with the EU are in full flow, but without the backing of the House of Commons, the work of his team could all be in vain.
The pound had a mixed day yesterday as conflicting reports emerge throughout the day of whether or not the UK and EU would manage to agree the terms of a new withdrawal agreement before the EU summit beginning on Thursday, seen as the last opportunity the UK has to secure a deal before the Brexit deadline on Oct 31st.
The negotiations are moving in the right direction, but Johnson has been told he needs to make more concessions and EU officials are concerned a full agreement that he can present to the UK Parliament this weekend is unlikely.
Finland’s Prime Minister Antti Rinne said it was not practical to agree before the EU summit, but negotiations could continue afterwards. The Northern Ireland border still remains the main sticking point, Johnson’s plan essentially leaves Northern Ireland in a hybrid customs territory linked both to the UK and EU, reviewable every 4 years.
EU leaders are concerned without a hard border the plans would make it difficult to control what enters the EU from the UK through the Irish border. However, a hard border could destabilise the peace. Irish Foreign Minister Simon Coveney said a deal was possible with more work.
GBPUSD opened at 1.2581 and drifted downwards throughout the morning eventually bottoming out at low of 1.2535. Sentiment improved in the afternoon and the pair climbed to reach a high 1.2620.
GBPEUR also fell from an open of 1.1422 to a low of 1.1364 but rose in the afternoon to reach a high of 1.1451.
This morning has seen more developments, speaking at his arrival of a gathering of EU leaders in Luxembourg, the EU’s Chief Negotiator Michel Barnier said, “Our team are working hard” and a Brexit deal is “still possible this week” The pound has risen again this morning, GBPUSD reached 1.2691 whilst GBPEUR touched 1.1499 matching the high seen on Friday.
The US dollar rose on Monday after 2 days of losses as optimism about the recent trade deal between the US and China faded. US President Trump outlined the plans for Phase 1 on Friday, but officials on both sides have said a lot more work is required before the deal could completely be agreed.
The dollar index reached a high of 98.53, moving away from the 2-week low of 98.23 seen on Friday. EURUSD had a choppy day, opening at the low of the day 1.1019, it rose sharply in the morning to the high of the day of 1.1040 and the bounced around for the remainder of the session eventually closing at 1.1028.
