EU’s general affairs council agreeing a trade negotiation mandate
26 February, 2020
Following the EU’s general affairs council agreeing a trade negotiation mandate yesterday afternoon Pound sterling rallied back to the top end of the current market for the euro and dollar, with both nearly jumping a cent.
As stated by the EU they now have a “reference point” agreed in which Michael Barnier can take forward to any future negotiations with the UK. with the key areas being State Aid, competition , employment standards, environmental standards and climate change. However the Eu does want the UK to adapt and change their laws where suits best but still within the EU’s guidelines. With one of the main topics brought up yesterday being agricultural sanitary- the EU require the UK to keep a ban on chlorinated or hormone fed animal products in order for an agreement to be made.
The main question for sterling is how flexible is the mandate and is it going to bat the UK into a corner straight off from the start making it difficult for any negotiations to develop and succeed, This well and truly keeps the door open for a no deal come December, feeding the currency markets the dreaded uncertainty and risk for a large amount of downside potential. However over the next few months we will be experiencing high amounts of volatility as a lot of sterling strength / weakeness will be driven by how the negotiations begin to go.
However with market open this morning we have seen sterling lose some strength as expected ahead of Boris’s negotiation plans taking place this Thursday. We could see the beginning of a downward trend following this.
If you have an up and coming transfer to make please don’t wait until its too late and the market has moved against you, we are currently not far off the best rates since 2016 take advantage of them whilst they are here. Please get in touch with your currency consultant and they will be able to help limit your risk.
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