First deadlock, then hope – the Brexit negotiation saga continues
- Brexit repeatedly shocking exchange rates (easyMarkets)
- Leaked document signals hope for UK trade deal
- Sterling bulls quick to rejoice at the hint of good news
Just like life, the currency market is a roller coaster. Take what happened on 12 October with the Brexit talks. First in the afternoon we had doom and gloom and then a few hours later we had hope.
In all divorces, one of the key areas that most lawyers will lock horns over is money. And the Brexit negotiations are proving to be no different. Michel Barnier, the EU’s chief negotiator, said that there was a “deadlock” over the UK’s so-called divorce settlement. He also said that the lack of progress on this matter was “disturbing”.
The UK was hoping that it would make some headway and at least agree to start talks on a future trade deal before the crucial EU summit on 19-20 October. However, this has yet to happen. In fact, Mr Barnier has said that he felt he was not in the position to recommend to the European Council to start discussions on the “future relationship.”
“With March 2019 fast approaching the lack of progress and the increased chances of the UK getting no deal sent shivers down the spines of sterling bulls with GBP crashing against both the USD and the Euro. The GBP/USD had fallen down to the 1.31310 levels and the EUR/GBP had risen to around 0.90184.”
James Trescothick, Senior Global Strategist, easyMarkets
Meanwhile, a leaked internal draft document hinted that the 27 European Union countries should prepare to discuss trade amongst themselves, which will pave the way to start negotiating trade talks with the UK Government in December. The paper underlined Mr Barnier’s earlier comments about a lack of progress, but also mentioned there had been developments on some key areas, which would please many.
Though this draft can at any stage be revised, it does show a tiny a bit of hope that a deal could be made before the UK’s official exit.
The market reacted swiftly to the news.
“Sterling bulls rejoiced. GBP/USD skyrocketed back above 1.32 reversing its previous losses of the day and at the time of writing is currently trading around 1.3264. The EUR/GBP did the opposite and crashed back down, falling below 0.9000 levels to trade around 0.8925. What a difference a few hours make!”
James Trescothick, Senior Global Strategist, easyMarkets
When Theresa May announced that Britain would honour its financial commitments to the EU, there was the belief that the fifth round of talks would finally bring some much needed clarity that a deal could indeed be made in time. Initially it looked like that the EU and UK were getting nowhere, but this leak has shown there could be a bit of light at the end of the tunnel.
“We are still very much in unknown territory, but one thing that is mostly likely certain is that we will continue to get ups and downs with the Brexit roller-coaster.”
James Trescothick, Senior Global Strategist, easyMarkets
For further details, visit www.easymarkets.com, email pr@easymarkets.com or call +44 203 1500 748.
About easyMarkets
easyMarkets® is an online pioneer market maker established in 2001. We’ve made trading markets as easy as possible with proprietary mobile, web and desktop platforms. Traders enjoy full markets access with a simple and powerful approach to CFD’s, forex and options trading.
easyMarkets® is part of an international network with offices in Europe, Asia and Australia.
Risk warning: Forward Rate Agreements, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (Easy Forex Trading Ltd- CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (Easy Markets Pty Ltd -AFS license No. 246566).