Another volatile day for Sterling as we saw the Pound lose the recent gains it had made due to news that the EU will harden its stance on fisheries. After a positive start to the week, this morning we see cable back down to 1.2910 levels, and GBPEUR at the 1.0983 mark (08:06).
Starting off Tuesday’s session cable was trading strong, close to breaking the 1.30 mark. But detrimental news on Brexit put a halt to those gains, forcing the pair to close the day at 1.2943.
GBPEUR also lost its momentum yesterday. The pair opened the day at 1.1021, before depreciating back into the 1.09’s, finally closing off the day at 1.0990
It has been reported that European Fisheries Ministers from influential states have instructed Michel Barnier that he must secure full access to UK waters by leveraging the EU’s ability to take a trade deal completely off the table. Irish news outlet RTE support this claim, noting that “under the terms of the future relationship negotiations, there can be no overall free trade agreement unless there has been a deal on fisheries… it is understood member states are pushing Mr Barnier to use the leverage provided by the precondition that a free trade agreement cannot be concluded without a side deal on fisheries.”
To make matters worse for the Pound, French President Emmanuel Macron is not making negotiations easier. Bloomberg reported that “Paris’ stance on fish is becoming a second major focus of concern… Macron designed the EU’s hard-line opening position - that Britain should be forced to hand over just as much fish as it did when an EU member - and so far hasn’t budged”. Although up until this point fellow EU allies have supported France’s stance of fisheries, the same Bloomberg report argues that tensions between EU leaders is growing rapidly, particularly between Paris, Brussels, and Berlin. The report notes that although some key EU leaders believe “Macron’s stance is a negotiating tactic… trust in the French president has all but evaporated, they said. They are convinced that Macron’s stubbornness could lead to a no-deal outcome.”
As for EURUSD, the pair opened the trading day at 1.1784 – and with little price action over the day closed off at 1.1777.
On the data front, the USA is in the spotlight today: in the afternoon we have MBA Mortgage Applications, Consumer Credit Change, and of course the FOMC Minutes. We also have speeches from Fed members Evans, Williams, Kashkari, Barkin and ECB President Christine Lagarde.
