FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
44,113,743Confirmed
1,169,178Deaths
32,324,089Recovered
Fetching Location Data…
Advertisement
Advertisement
Bob Mason
Great Britain vs EU conflict, international relations, fists on flag background

The EU Summit

It was all eyes on the EU Summit on Thursday, as negotiators and heads of states entered a final round of negotiations.

Ahead of the Summit, Boris Johnson had set a deadline of 15th October for a Brexit blueprint to be in place.

Advertisement

The deadline was imposed following a lack of progress from the week prior and a heated Macron–Johnson call from the weekend.

Prior to Johnson’s call with Macron, the EU had talked of compromise as the two sides remained deadlocked.

Macron made it clear that access to UK fisheries must remain unaltered, which drastically reduced the chances of an agreement.

For Boris Johnson and British negotiators, there was little progress made towards any kind of an agreement.

UK fisheries remained a stumbling block, with both sides refusing to yield.

On Wednesday, the British Prime Minister had extended his self-imposed deadline until today. The deadline was extended to consider any progress made at the EU Summit on Thursday.

With ‘no strong and credible’ sign of a breakthrough, the big question is whether Boris Johnson will pull the plug.

British negotiator David Frost appears to be of the view that a deal is reachable over the next 2-weeks.

For the British PM, however, another false deadline may prove to be damaging to his credibility. EU negotiator Barnier had mocked Johnson’s deadline earlier in the week.

When considering the EU conclusions released and summarised below, both sides have their work cut out should there be yet another round of talks.

The EU Conclusions

  • European leaders urged the UK government to take the necessary steps to clinch a UK-EU free trade deal.
  • The EU is eager to reach a fair deal, but not at any price.
  • All 27 member states agreed for Michel Barnier to continue negotiations.
  • In addition to UK fisheries, the EU cited other key areas of focus that included a level playing field and governance.
  • With regards to the Internal Market Bill, the Withdrawal Agreement and its Protocols must be fully and timely implemented.
Advertisement

Boris Johnson and the Pound

On Thursday, the Pound fell by 0.79% to end the day at $1.2909. It could have been much worse, with the Pound having visited sub-$1.29 levels before finding support.

For the day ahead, however, it all hinges on Boris Johnson and his view on the outcome of the EU Summit.

EU negotiators believe that talks can continue through to the middle of next month. Johnson’s latest deadlines suggest that Britain thinks otherwise. It is no coincidence that the EU’s mid-November timeline comes after the U.S Presidential Election. There is a view that the EU is stalling on the hope of a Biden victory. Johnson would lose Trump’s support, which could change the shape of negotiations.

Today’s comments from Downing Street will be pivotal, therefore, in what lies ahead.

If Boris Johnson agrees to extend talks for an additional 2-weeks, the EU may consider this as a small victory.

An unwillingness to yield on demands to access UK fisheries and a willingness by the British government to extend talks suggests the possibility of compromise.

It also means that the EU, and not Britain, will have greater control over the timelines for any remaining negotiations. If that proves to be the case, then talks can drag on until mid-November.

While this may ease some pressure on the Pound, it is worth noting that EU member states must now prepare for any eventuality. Perhaps a hint of submission that there may be no favorable outcome to further talks.

At the time of writing, the Pound was down by 0.06% to $1.2894, recovering from an early low $1.28864.

A decision by Boris Johnson to pull the plug on Brexit and further talks will send the Pound into a spin. Despite the outcome of Thursday’s Summit, hope has continued to prop up the Pound ahead of Johnson’s announcement later today.

It could be another flash crash or a move back to $1.30 levels and perhaps higher…

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US