Brexit transition period to be extended to 2021
30 January, 2018
Brexit has once again dominated the headlines yesterday as the whole saga continues to dictate the currency market. On Monday, 27 countries within the European Union voted in favour for the Brexit transition period extended for the UK, effectively leaving the EU at the end of 2021. This means that during this transitional period the UK must abide by the rules of the single market and the custom union which includes the freedom of movement for EU citizens but will have no voting rights. Further brexit negotiations will commence within the next couple of weeks in Brussels which may confirm that this period is to be extended. Should this happen then Sterling may reverse the gains it has made against both the Euro and the Dollar. Investors have supported the pound in recent weeks which has seen a much needed boost gaining nearly 3 cents on the Euro and nearly 9 cents on the Dollar. Since Thursday of last week the Pound has already started to weaken against both of the majors and things can go from bad to worse when negotiations talks resume.
Yesterday saw a continuation of the slumping pound, the dollar gained over a cent and a half on Sterling as did the Euro gaining just under a cent. This morning has copied the same trend as both the majors continue to add to the pounds woes of the past couple of days. Today there are currency news data releases due that are likely to affect the rates, firstly starting in the UK as consumer credit and mortgage approvals are set to be released at 9.30am. Over to the Euro zone at 10am as GDP is to be announced which is expected to remain at last month’s figure of 0.6%, should this not be the outcome then we can expect some volatility during this release and thereafter. Finally in the afternoon Bank of England governor Mark Carney is due to make a speech at 3.30pm again expect market movement during this time.
The Brexit transition period will likely be further discussed in upcoming trade talks due in February, with currency markets sensitive to the success of the talks.
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