15/12/2020

Sterling gains as Brexit talks are extended


GBP

Sterling rallied against the euro and dollar during early trade on Monday, benefitting from news that Britain and the European Union had agreed to extend trade talks past Sunday’s deadline.

The news injected fresh optimism back into markets that a deal could be achieved as early as this week after a demoralising previous week which saw rates against the dollar and euro fall to multi-week lows.

Adding to the optimism yesterday were comments from European Union Chief Negotiator Michel Barnier who acknowledged that a Brexit trade deal could be sealed as early as this week after Boris Johnson is said to have made a key concession at the weekend. Barnier stated that Johnson’s acceptance of the need to ensure that there was fair competition for British and European businesses had unlocked the talks despite difficult issues remaining.

This suggestion of a concession from the U.K. was dismissed by U.K. officials who challenged the reports labelling them as inaccurate briefings. U.K. officials added that “talks remain difficult and we have not made significant progress despite the U.K. side bringing energy and ideas to the process”.

Commenting on the state of talks European Commission President Ursula Von Der Leyen struck a more optimistic tone stating there was “good movement” and that talks were at “the very last essential mile”.

Despite the positive signals on progress for the level playing field provision, concerns over a deal on fisheries remain after reports citing Michel Barnier claimed that talks on fisheries had gone backwards. According to reports Barnier complained that the UK believed that as it had made efforts on the level playing field, then the EU should reciprocate with concessions themselves on fisheries.

The UK’s Unemployment rate increased to its highest level for four years today. According to data release by the Office for National Statistics unemployment rose to 4.9% from 4.8% previous beating expectations of a 5.1% rise.

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