03/03/2020

Sterling falls as EU trade talks commence


GBP

Sterling came under renewed pressure on Monday, dropping to a 4-1/2 month low against the euro, as traders took a cautious view at the start of talks between Britain and the European Union on their future relationship after Brexit.

Around 100 UK officials headed to Brussels for the first round of talks, with the EU’s executive arm, the European Commission, which are due to last until Thursday. Half a trillion euros worth of annual trade and close security ties are at stake in what are bound to be tense talks.

The EU wants to give Britain beneficial access to its single market of 450 million people in exchange for guarantees that London would prevent dumping. However, Prime Minister Boris Johnson has said he wants to move away from the EU and refuses to be bound by its rules or the jurisdiction of its top court — all necessary, in the EU’s view, to ensure fair competition.

The pound also reached four-and-a-half-month lows last week against both the dollar and the euro as fears of the spreading coronavirus prompted a selloff in global markets.

The Bank of England said it was working with Britain’s finance ministry and international partners to make sure “all necessary steps are taken” to protect the banking system and the broader economy.

Signs the global impact of the coronavirus are starting to weigh on a post-election recovery in Britain’s manufacturing came on Monday as factories reported bigger delays in their supply chains.

Key Announcements

 09.30 – GBP – BOE Governor Mark Carney Speaks; Speaking on January Monetary Policy Report before the Treasury Committee.


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