Brexit Deal or No Deal?

The Pound has moved between narrow gains and losses hovering around the $1.29 mark as Boris Johnson tells the UK to prepare for a no trade deal Brexit. However, with more talks due to start in London on Monday, the question arises as to whether anything has changed?

Brexit 7

The Pound has moved between narrow gains and losses hovering around the $1.29 mark as Boris Johnson tells the UK to prepare for a no trade deal Brexit. However, with more talks due to start in London on Monday, the question arises as to whether anything has changed?

Talks again on Monday
In response to Boris Johnsons remarks EC Commission President Ursula von der Leyen will send a team to London to intensify talks. Chief EU negotiator Michel Barnier is due to meet with his UK counterpart David Frost later today. The fact that talks are seemingly continuing is underpinning the Pound and by Monday it could be as if Brinkmanship never happened.

Political posturing
The Pound hasn’t slumped back towards $1.25/20 levels which it traded at when a no deal Brexit probability rises. This could be because the markets are still reading this as political posturing rather than anything more serious at this point. However, this jittery nature of trading in #GBP this morning suggests that the markets believe that we are moving towards a pivotal moment. 
Let’s not forget that the Brexit saga has been dragging on for 4 years which means that the markets have grown accustomed to a certain type of behaviour from politicians surrounding the issue and a certain amount of political posturing. 

Pound ready to move on?
The absence of a sell off could also mean that Pound traders are ready to move on to the next stage after four long years of Brexit rhetoric. However, that seems a little less likely given the perfect storm of no trade deal Brexit, tightening covid restrictions and surging unemployment which could hit the UK economy at the end of the year.
With the Pound trading at this level, it’s fair to say that the market assumption is a bare bones deal will be scraped together at some point before it’s too late.


UK equities weaker
It’s not just GBP which is being impacted by the continued Brexit uncertainty. UK equities might be trading some 1% higher today. However, they have been shunned in favour of international peers over the past four years since the Brexit vote. The UK’s recovery from the covid crisis has been weaker than its peers as Brexit uncertainty looms.


More from Brexit

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.