Time appears to be running out for the UK and the European Union in order to arrange a trade deal prior to the end of this year. The most recent deadline that has been suggested is that of next Monday 23rd November. With so many deadlines already having been passed so far it may be difficult once again to hit this one. We are just over 6 weeks before the end of the year and time appears to be quickly running out. We have seen the pound to euro rate and Pound US Dollar exchange rates move in a slow upwards direction during the last few weeks as the talks have continued. The two parties are still at loggerheads but as the talks continue this is giving the Pound an element of support.
With Dominic Cummings and Lee Cain having recently been removed from their positions they have been two of the Prime Minister’s closest allies when it comes to Brexit.
With them now out of the picture this may help take things forward for the government and allow them to be more accommodating with the European Union to arrange a deal.
With the pandemic still in full flow the current lockdown has caused huge problems for the UK’s economy and the government’s handling of the crisis has been criticized by many up and down the country. Boris Johnson does not appear to have come out favourably so far so in order to increase confidence once again in his leadership then if a Brexit deal takes place this could see his popularity increase once again. If this happens this could help to also strengthen the Pound against a number of major currencies.
The two biggest stumbling blocks are that of a level playing field which is a plan to ensure both sides of the water have the same competitive rights as one another. If this does not take place then a deal is unlikely to take place.
Therefore, the potential plan is to try to align many of the current trade deals to follow a similar plan. This would also involve protecting workers rights and well as aligned plans as to how to handle the environment moving forward in to the future.
Arguably one of the major stumbling blocks is that of the fisheries. The European Union want to maintain full access to the same waters but the UK do not want this to happen. This particular issue has been a sore point for a long time already and at the moment both parties have still not yet reached a satisfactory conclusion.
Both Michel Barnier and David Frost have maintained the talks during this time and both remain ‘determined’ and ‘patient’ which is a good sign that both parties attempt to reach a resolution.
The EU Summit is due to take place later this week and clearly Brexit will be at the top of the agenda. With the talks ongoing this can be taken as a good sign but with time ticking this means that the EU may need to rush things through during late December which could then start having a big impact on the currency markets. Get in touch using the form below to discuss these factors and how your currency exchange rate is likely to be impacted in the coming weeks.