- Posted by currencies in Bank of England, Brexit, coronavirus, UK, Uncategorised
- October 14, 2020
- No Comments
Sterling is on the defensive as uncertainty abounds over whether Britain and the European Union will have reached a Brexit deal in time for their self-imposed deadline on Thursday at the EU Summit.
Sterling overnight implied volatility gauges soared to a seven-month high of above 13% indicating investors were prepared for unexpected moves in the British currency in the next hours.
British Prime Minister Boris Johnson and the head of the European Commission, Ursula von der Leyen, will talk about the progress of the Brexit negotiations this afternoon.
The two chief negotiators, the EU’s Michel Barnier and Britain’s David Frost, say they are inching towards a deal, though they have underscored that important gaps remain on fishing, level playing field issues and governance.
EU leaders meeting in Brussels on Thursday and Friday to discuss Brexit will say that progress in talks with Britain is “still not sufficient” to seal a new trade deal.
However, any agreement will likely be far removed from what analysts had initially hoped for, limiting the gains for sterling even if a deal is signed.