Swissquote Bank Research Team
Swissquote Bank Ltd
British pound optimism is over. EU chief negotiator Michel Barnier’s optimistic rhetoric is now sounding more concerned. After meeting with Brexit Secretary of State Dominic Raab in a one-hour meeting on Sunday, the tone of the negotiations has drastically changed. No further talks are planned until Wednesday 17 October, thus leaving one single day for both EU and UK negotiators to reach a deal that will be voted on by all 27 EU members the day after. According to Prime Minister Theresa May, the current terms are not agreeable. There is a risk that EU leaders decide during the Thursday, 18 October meeting to reject the extension of a special Brexit summit in November, which would damage the UK economy and lead to a no-deal Brexit in March 2019.
The fate of Brexit depends more than ever on decisions of EU policymakers, thus pushing further pressure on GBP. Additionally, will PM May be able to sell the agreement (if any) to UK MPs in December? GBP/USD is struggling to maintain its gains from a 1.3230 high (11 October). The currency pair is approaching 1.31.
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This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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