Last week became extremely eventful after Boris Johnson’s meeting with EU Commission President Ursulsa von der Leyen seemed to go South and No-Deal preparations were the only headline you could read from Thursday into Friday. The agreement was they would continue talking until Sunday and then decide whether it was worth continuing or walking away from the table- and of course, they have decided to continue talking and have kicked the can down the road once again.
For this reason, I am expecting that the big sell off on Sterling from Friday is now reversed, even by just a little. The important point from Sunday’s announcement is that a new deadline HAS NOT been set- which to me says that both sides want a deal to happen. Those of you who read these articles know I have been optimistic on a deal, but the last few days even I had to re-assess my thoughts with all of these No Deal headlines! (This is why I stay off watching the news).
My view of Brexit talks is this, as long as they continue, then a deal is likely. It is as simple as that. The transition period runs out December 31st so I would hope to see something positive before then, but another extension really would not surprise me at this point. However, there is every chance we see a deal this week (Though I would not hold my breath)- which could see Sterling exchange rates bounce. A No-Deal outcome is now priced in which has left GBPEUR at 1.0921 and GBPUSD at 1.3226.
Apart from that, not much else to say at this point on Brexit- the tiers in the UK will be reviewed again this week and it seems that London may be going back into Tier 3 (There goes my plans for the weekend)- and Christmas markets are in full effect so liquidity is thin!