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Market Update

• Posted by currencies in Brexit, coronavirus, Economy, Prime Minister, Sterling, UK, Uncategorised
• December 18, 2020
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The British pound fell, reversing some of its recent gains, as EU chief negotiator Michel Barnier warned that there were just hours left to reach a Brexit trade deal with London.

Market confidence had risen sharply this week that the two sides will clinch a deal, which would ensure that the goods trade which makes up half of annual EU-UK trade would remain free of tariffs and quotas beyond Dec. 31.

The pound hit 2-1/2 yeah highs above $1.36 on Thursday, today’s trading session served as a reminder that a deal is far from guaranteed.

Barnier told the European parliament that the path to an agreement was “very narrow”.

We remain of the view that a deal will eventually be agreed on, although it is quite a close call considering the short time left for negotiations.

British Prime Minister Boris Johnson told European Commission President Ursula von der Leyen in a call on Thursday that it now looked very likely that an agreement would not be reached unless the EU position changed substantially.

Von der Leyen said progress had been made but bridging the divide on some areas, especially fisheries, would be “very challenging”.

A gauge of confidence among British consumers jumped by the most in eight years in December, boosted by the launch of the country’s coronavirus vaccine programme, a survey showed.

The last time the index jumped by more than seven points was between October and November 2012.