Brexit talks hang in the balance
Talks between Britain and the European Union over a post-Brexit trade deal are mired in a stalemate after a call between the two sides’ chief negotiators concluded without a breakthrough. David Frost and Michel Barnier held discussions for the second day running on Tuesday as they tried to restart talks that were suspended by Prime Minister Boris Johnson on Friday. The UK rebuffed the EU’s push to revive the deadlocked trade talks, holding out for more concessions from the bloc. UK Prime Minister Johnson has asked for a fundamental change in the talks and that it’s going to be a genuine negotiation rather than one side making all the moves.
Meanwhile, the House of Lords inflicted a defeat on Johnson as peers voted by 395 to 169 to protest the government’s Internal Market Bill. The rare motion of “regret” is a sign the bill is likely to be extensively rewritten at a later stage by the unelected upper house.
Even with the current stalemate it is unlikely to alter the markets expectations that by the year end a deal will be done. The pound softened against the euro to 1.0950.
US dollar dipped on Tuesday, hitting a one-month low against a basket of major currencies, as investors awaited the outcome of fiscal stimulus talks ahead of the upcoming US presidential election.
House Speaker Nancy Pelosi is optimistic that the democrats would reach a deal with the Trump administration on additional COVID-19 relief that could get aid out by early next month.
The euro was up against the USD to 1.184 which is a one-month high. Sterling however dipped marginally 0.07% to 1.2941.
Markets are confident a win by Biden would lead to more fiscal stimulus, but investors are also wary of a potentially contested election result that might boost the USD safe-haven appeal. The dollar will continue to react to polls as the election day draws closer.
- 13.10 – MPC member Ramsden Speak
- GBP UK net borrowing – Result 35.4B Forecast 32.5b
- UK CPI – Result 0.5% Forecast 0.4%
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