Clear channel between the UK and EU in respective of trade deals
5 February, 2020
Following on from Brexit day the end of last week it has been a volatile time for sterling as we begin the month, From market open we have seen GBP/EUR and GBP/USD nearly loose two cents in a sell off following Boris and Barnier speeches. The large drop wasn’t solely down to both stating their negotiating positions but it has given the markets the uncertainty of a deal ever being reached. However after the shock interest rate decision to remain the same last Thursday this overpriced sterling and set up the market for an exaggerated fall following details of trade deals being leaked over the weekend ready for market open.
After Monday’s speeches it is clear there is a channel between the UK and EU in respective of there ideal trade deals. Borris stating he wants a thrieivng and economic relationship with the EU but also the UK will no longer except EU rules come December. with the UK now seeking a similar Canada free trade agreement with the idea of 100% of all duties and tariffs removed. This has kicked off what will be a long uphill trade negotiation. Depending on how the negotiations go this will primarily influence how GBP trades over the next few months as the dead line draws closer.
We will expect a lot of volatility over the next few stages of the negotiations, just because Brexit day is done and dusted it doesn’t mean sterling will be in for a plain saling ride up to where it left off in 2016. A deal still needs to be negotiated so please take this into account as a lot of downside potential is still at bay.
Please get in touch with your currency consultant today to discuss how you can limit your risk for the months ahead but also take advantage of the highs whilst they are there.
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