In all honesty, I think the title of this article really says it all. I have been patiently watching my screens all weekend waiting for something of substance to arrive on my screen which would give us an idea of what to expect next- but maybe my expectations were too high from the Brexit negotiations!
As I write this (Sunday 8pm just in case something releases overnight) the latest updates from the EU side are as follows;
IRISH PM SAYS THERE IS EVERY CHANCE TALKS COULD LAST UNTIL EU COUNCIL DEC 10/11 MEETING
EU OFFICIAL SAYS UK DEAL “DEFINITELY” NOT COMING TONIGHT, ALL THREE CONTENTIOUS ISSUES STILL OPEN
Unfortunately, maybe we all got a little too excited thinking a deal may happen by Monday, it looks like things will continue to drag on through the week. The UK Government have been talking about a “No Deal” again and there are rumours that they could be pushing for this as early as Monday, with the Cabinet’s full support. I do believe this is a negotiation tactic and as we are at final hours it makes sense the UK would go for a bold move like this to get things moving. PM Boris Johnson is expected to address the nation on Monday evening if negotiators are unable to move forward and break the deadlock.
Many banks are now amplifying that they are expecting a No Deal out of this negotiation, which in pre-market seems to have already affected rates as both GBPEUR & GBPUSD are around 50-60 pips lower. A realistic no deal scenario here would be one without tariffs, and as free trade is the one thing both sides do agree on, I can see this being a realistic prospect.
Currently, a trade deal is priced into Sterling exchange rates, so if it does happen, we are not expecting massive gains- however, a No Deal scenario would definitely shock the market and I can see a move up to 8% downwards in this case.
The deadline, in reality, is Thursday 10th December, the next EU Summit, and a lot can happen in 4 days. We still maintain our view that a deal will be agreed, albeit a thin trade deal- but we really are at crunch time. Another realistic scenario I can see (If a no-deal) is that there would be an extension of no tariffs until a deal is agreed. (I feel if a No Deal were to happen, leaders would be back round the table very quickly to get one done).
It’s going to be a very busy week, please give me a call or drop me an email if you need assistance.