Brexit Update – As the Weekend Nears, so does sub-$1.30 Levels for the Pound…A no-deal scenario the likely outcome. That’s the news of the day. The ever eternal optimists will be hoping for good news before the markets close…
No UK trade deal the most likely outcome. That’s quite a headline for the global financial markets to stomach.
On Wednesday, Boris Johnson and his chief negotiator Frost met with the EU President and Barnier.
A lack of progress and a new deadline was the upshot of the dinner meeting ahead of the EU Summit.
Thursday and Friday’s EU Summit had been the final deadline before Wednesday’s meeting.
As the week comes to a rapid end, the chances of a Brexit agreement have diminished rapidly. More importantly, few would want to be exposed to the unpredictability of weekend talks.
French President Macron spoke out today stating that the EU will stand firm on fishing quotas and other issues. Macron’s comments came off the back of the EU President announcing that a “no-deal” outcome was likely.
British PM Boris Johnson has also warned that there is a strong possibility of a no-deal unless the EU changes its stance on the remaining Brexit obstacles.
While there will be plenty of chatter from Brexiteers and “pro-Remainers”, reaching an agreement would have defied the odds.
The EU was never going to cede and give Britain an edge. In fact, the EU had always looked to make it as unattractive as possible for any other member state to leave the EU.
Such a stance may well leave Britain without a deal. It will also bring chaos, not just to Britain, but to member states reliant on Britain, from an economic perspective.
As the dust settles, assuming that Macron does not eat his words between now and Sunday, the EU project may also come into doubt.
Not all EU member states have an interest in access to UK waters. Neither do all EU member states have any major concern over business competitiveness. With economic hardship hitting the EU and the global economy as a result of the COVID-19 pandemic, many will argue that now is not the time for another economic event.
Time will tell just who comes out worse off from Britain falling out of the EU without a deal. For Macron and the EU Establishment, they will be hoping for the British economy to implode. A prosperous Britain would certainly incentivize the likes of Portugal, Italy, Greece, and Spain. There is also the French Presidential Elections to think about next year. If French fishermen do lose access to UK fisheries, one can only imagine that Macron will bear the brunt of the fallout…
At the time of writing, the Pound was down by 1.07% to $1.31454, following on from Thursday’s 0.81% decline.
In all reality, holding onto $1.30 levels before today’s close would be impressive should there be no progress towards a deal.
That would also make Monday a particularly interesting day for the Pound, which could sink to sub-$1.20 levels or surge through to $1.40 and beyond.
It will either be a flash crash or reprieve for a Pound that has been under the hammer since the 2016 Referendum. Before that, however, expect some more choppiness today.