PM Announces Alterations To Withdrawal Agreement
The British Pound has come under fresh selling pressure this week in response to the latest Brexit headlines. The UK PM is reportedly considering launching new legislation which would essentially override a crucial part of the UK’s withdrawal agreement with the EU. The planned alteration could affect a shift in the way the new Northern Ireland customs arrangements would operate.
Fears over the lack of progress in talks have drawn increasing attention recently with many key issues still remaining unresolved, prompting concerns that the talks will ultimately fail. The UK PM, Boris Johnson, said this week that if the two sides have not agreed a trade deal by 15th October, they should “move on” (E.G abandon talks) though said this would still be a “good outcome” for the UK.
8th Round of Talks Underway
Negotiators from both sides are due to commence the eighth round of talks today, focusing this time on a deal which would facilitate companies trading without taxes or customs checks. However, against a backdrop of increasingly pessimistic commentary, hope of progress remain subdued. Johnson has signalled that he will inform EU leaders of the need to secure a trade deal by the October 15th European Council meeting, to allow for the deal to come into effect on January 1st 2021.
Commenting on the progress of negotiations, Johnson said: “If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on.” The UK is aiming for a free-trade agreement in the same style as the one achieved between the EU and Canada whereby the majority of tariffs were dismantled, allowing for the mostly free trading of goods and services.
Key Hurdles Remain
In terms of the key obstacles posing a challenge to the progress of the talks, there are two specific issues which stand out: fishing rights and state aid. The EU has accused the UK of attempting to secure a competitive advantage for itself through selective rules over state aid. However, the UK remains adamant that it should have total sovereignty over rules regarding state aid.
Talks continue for now, however, in light of the increasingly jarring commentary around the progress being made, including reports that EU leaders are dismissing Johnson’s latest ultimatum, the chances of a deal being done appear increasingly slim.
EURGBP (Bullish above .9097)
Following the breakdown beneath the rising trend line from year to date lows, EURGBP has since found firm support at the retest of the .8861 level. While price holds above here, a further bullish phase is not out of the picture though bulls will need to see price back above the .9097 level quickly. To the downside, a break of that level would pave the way for a run down to the .8544 level next.
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