Could a deal be done before 31st October?
Boris Johnson has claimed that he will be stepping up his efforts in order to secure a deal with the European Union prior the 31st October deadline. According to reports Brexit negotiators will be meeting twice a week in September prior to the next summit due to be held on 17th and 18th October. Clearly many MPs are upset with Johnson’s decision to suspend parliament and we now have just two months to go before the deadline.
Last week, both German Chancellor Angela Merkel and French President Emmanuel Macron were a lot more open to the idea of renegotiation with the current EU Withdrawal Bill. Both sides have demonstrated a willingness to take things further rather than continue with the current stalemate. At the moment the current plan is to leave the EU on 31st October without a deal with Johnson claiming, ‘no ifs, no buts.’ However, with Johnson having visited Europe last week as well as saying he had seen ‘a willingness to talk about alternatives to the anti-democratic backstop,’ it appears as though he is also looking to find some form of resolution. The main obstacle appears to be the Irish backstop arrangement and if this can be resolved could this be the solution to getting a deal done before the 31st October?
Impact of Brexit on the Pound to Euro exchange rate
The impact for the pound vs the euro has been rather negative recently with GBP/EUR exchange rates failing to break much past 1.10 interbank levels. If there was to be some real progress towards a deal being done then this could see the pound make some gains. However, until we have a clear solution then any gains for the pound vs the euro may be limited.
Factors affecting the Euro exchange rate
Meanwhile the political situation in Europe is rather unstable. Italy has had a recent change to its government and Germany is close to hitting a recession if the current quarter sees negative growth. Therefore, if we were not in the midst of Brexit I would fully expect the pound to be doing a lot better than its current levels.
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