PM Rejoins Trade Talks
With the UK and Eurozone member nations now moving swiftly out of lockdown, focus has begun to shift way from the battle against the virus and onto other fundamental matters. Among these, Brexit trade talks have returned to the limelight as both sides step up their calls for a deal to be done within the current schedule (December 31st deadline). For his part, UK PM Boris Johnson has reiterated his warning that the UK is prepared to walk away from talks if a deal is not agreed in time and, despite the loss of negotiations time due to the COVID-19 crisis, has warned that he will not be extending the deadline.
The PM this week conducted video-link meetings with EU Commission President Ursula von der Leyen as part of a new push to restore momentum into negotiations. On the back of these meetings, the UK PM told reporters he felt there was a “very good chance” of completing a deal within the current timeframe. Johnson went onto say that he also believed such a deal could be “done in July” as both sides agreed to ramp up the intensity of the talks.
Johnson had previously warned, in a mandate issued before the COVID-19 crisis struck, that unless a robust outline for a deal was agreed in June, due to be approved in September, the UK would walk away early. However, it appears that the PM has at least moderate his stance to some extent in light of the huge disruption caused by the virus outbreak.
In a joint statement issued after the meetings, the two leaders noted both the UK and the EU: “welcomed the constructive discussions on the future relationship that had taken place”. The statement added that “The parties agreed nevertheless that new momentum was required.”
Commenting on the talks, Johnson was forthright in his call for talks to be concluded as early as possible. When question over a cut-off date for the talks, Johnson said: “I certainly don’t want to see it going on until the Autumn/Winter as I think perhaps in Brussels they would like. I don’t see any point in that so let’s get it done.”
Need For A Deal Rising
The need for a mutually beneficial trade deal to be agreed has grown for both sides in the wake of the COVID-19 crisis. Both economies are facing the worst recession in living history as EU trade tensions with the US continue to show no sign of improving, a further trade standoff with the UK could be very damaging. Similarly for the UK, as the country starts to look ahead to the post-lockdown recovery, the risk of any further economic pain as a result of a tariff war with the EU would make the economy even more vulnerable.
EURGBP (Bullish above .8911)
From a technical viewpoint. EURGBP continues to consolidate just below the .90 level supported by the rising trend line from 2020 lows and the monthly pivot at .8911. While this level holds, near term bias remains bullish with the yearly pivot at .9097 the next upside objective. With momentum studies flagging bearish divergence, however downside risks are growing and a break of the .8861 support would open the way for a test of the yearly S1 at .87.
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