London RationalFX

RationalFX : Sterling falls on trade concerns

RationalFX : Sterling fell sharply on Monday due to statements from UK and EU officials on trade fuelled fears that the UK could reach the end of the transition period without a comprehensive trade deal…….

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In their first speeches since the UK officially left the European Union, both Prime Minister Boris Johnson and EU Chief Negotiator Michel Barnier appeared a million miles away from an agreement as both made strict demands for a UK-EU trade deal.

Johnson was the first to outline his hard-line post-Brexit stance by demanding a ‘Canada-style’ free trade deal, which would eliminate almost all tariffs for goods and services. He added that the UK will be prepared to walk away from trade discussions and leave on WTO terms should the EU insist on the UK adopting EU rules, as Johnson wants to be free to strike new trade deals around the world.

The EU Chief Negotiator rebuffed Johnson’s comments on alignment to EU rules, reminding Johnson that he has already agreed to the ‘political declaration’ which binds the UK to EU rules to ensure a level playing field. The news resulted in GBP’s biggest daily decline since December as the exchange rate fell by 1.3% against EUR and fell by 1.5% against USD.

Key Announcements

15:00 – USD – ISM Manufacturing PMI – Forecast at 48.5 from previous 47.2.

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