Good morning,

Continuing on from Jack’s post yesterday, and today also being a data silent one, the full focus of markets will be on the renewed trade talks kicking off in Brussels regarding a possible trade deal between the UK and the EU. Admittedly, it is hard to hear this and not think it is something we have heard endlessly before; but broken record or not, the market’s focus and attention on breaking meeting bulletins won’t slip, even if the UK public’s has.

As we enter the seventh round of negotiations, sadly, key sticking points remain on fisheries and competition rules with the bloc – as noted in previous articles, fisheries in particular is seen as the gateway to a wider agreement – as it is so politically toxic on both sides of the Channel. Whilst the market will be looking to hone in on remarks made regarding progress of talks as it happens, the key takeaway which will help in guiding market sentiment over the coming few months, is just how much does the UK Government actually want a deal?

Admittedly, the Johnson Government has done a far better job of playing hardball than the May administration when approaching talks; yet, there is now a broader feeling developing that the Government could essentially be slow-playing towards a deliberate no-deal as policy whilst keeping up the pretence of hard negotiation.

For now, the GBP/EUR market is holding its breath around the 1.1050 mark, with some exiting the market on the hypothesis outlined above, with the remainder supporting the market on headlines – such as David Frost’s announcement yesterday that Britain was looking to a September agreement. With only two and a half good months to play with, and with Q4 blocked out for no-deal business planning should it occur, this week could set the tone for a frantic couple of months for sterling.


Have a great day.

Author: Joshua Haden-Jones, Senior Relationship Manager

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