Brexit Update – Is EU Resistance Waning? Talks This Week Will Need to Deliver…
The Weekend
Brexit news from the weekend was Pound positive and there was very little chatter on the Internal Market Bill.
Last week, the final round of Brexit talks came to a conclusion, with both sides failing to concede enough ground.
A lack of agreement going into October was meant to translate into a no-deal Brexit.
News on Friday of Boris Johnson scheduled to meet Ursula von der Leyen delivered fresh hope.
Following talks, both sides agreed to extend talks through October. For Johnson, the Internal Market Bill doesn’t receive a House of Lords vote until November. The agreement to extend through October is aligned with those who saw the Internal Market Bill as a bargaining chip.
EU Commission President’s bid to battle Britain in the courts over the Bill likely drew Johnson’s attention.
Today’s News
Looking across the news portals today, there appears to be some discontent in Brussels. The EU Commission President’s decision to launch legal action against Britain went down badly.
Talks had been at a sensitive juncture at the time.
One can only speculate but court action would have to be on hold to allow talks to continue this week and next.
Today, Michel Barnier is Germany in an emergency meeting with Angela Merkel. Merkel has suggested that the EU be more flexible in negotiations. The issue with Merkel’s stance, however, is that she is on her way out and there has been a changing of the guards.
French President Macron will likely have a very different stance on negotiations with Britain.
Michel Barnier may be willing to be flexible, but other member states will need to be aligned.
Will Merkel be able to convince the likes of Macron to also compromise? After all, the French and others have a lot to lose should the EU give up their stance on fishing rights…
Pound Volatility
At the time of writing, the Pound was up by just 0.16% to $1.29496 for the day. Not the most convincing move considering the agreement to extend talks.
We can expect volatility to pick up mid-week, however, as the next round of talks kick off in London.
Britain is not going to give in to demands from Brussels to leave access to UK fisheries unchanged. It’s worth pointing out that a no-deal Brexit would block much of the EU’s access to UK waters.
It would make sense, therefore, for the EU to take a softer footing. Sending a message to EU member states tinkering with the idea of leaving the EU could prove particularly detrimental for some states…
What does this all mean for the Pound? Any hint of an agreement over UK fisheries should signal an imminent trade agreement. That should fuel a Pound rally and support the beginnings of a run towards $1.40. Failure to make progress this week may leave too much to get through in Brussels next week.
In such an event, will Johnson and von der Leyen begin discussions to delay Britain’s departure? The proverbial “Brexit Can” continues to be kicked down the road. Perhaps the final round of talks next week will bring to an end a painful 4-years of negotiations.
This article was originally posted on FX Empire
More From FXEMPIRE:
Weir Group’s Shares Jump 25% on Announcement to Sell Oil & Gas Division to Caterpillar
AUD/USD Price Forecast – Continues to Consolidate Around 50 Day EMA
Bristol Myers Squibb to Acquire MyoKardia for $13 Billion; Target Price $69
U.S. Dollar Index (DX) Futures Technical Analysis – Minor Trend Turns Down as Risk Appetite Returns
