As mentioned in my article last Friday, ‘The beginning of the end?’, progress is seemingly being made with regards to Boris Johnson’s alterations to the Brexit negotiations.
Some would say that it’s better late than never and no one more so than French President Emmanuel Macron, who announced over the weekend “that the negotiations should continue swiftly with Michel Barnier’s team in coming days, in order to evaluate at the end of the week whether a deal is possible that respects European Union principles”.
Essentially, this week will see frantic negotiations between the UK and the EU’s various leaders, with an aim of either approving the backstop changes or shooting them down before the crucial council summit on the 17th.
Make no mistake, although the pound has enjoyed some brief upside on the news that a parliamentary majority could actually pass the changes in the Commons; the fact remains that if the Europeans throw the changes out, the UK can still leave on the 31st with no deal.
Although the Benn Act legally requested the UK to ask for an extension beyond the 31st, should no deal be agreed at the end of the summit, it appears the Government will seek to take the legislation to the Supreme Court to force its departure – putting sterling well and truly back on a knife-edge.
At market open, GBP stands at 1.1210 on the euro and 1.2305 on the dollar. Whether it can stay above these levels will now, more than ever, depend on the outcome of this week’s negotiations. Expect every headline, speech, tweet and talk show outburst to be scrutinised by the market; if only one thing is certain, it is volatility.
Contact your account manager before the week is out to get an update on the markets and rates; as although hoping for the best may well be a tactic of the government, it should certainly not be one of yours.
Have a great day.