Yesterday the UK has struck a deal with the EU to the Brexit transition period. The transition period is the 21 month period which starts from 29 March 2019 (official Brexit day) to 31 December 2020. UK Prime Minister Theresa May likes to call this period an implementation phase. This period allows businesses time to prepare for new arrangement before the eventual permanent arrangements between UK-EU relations kick in. During this transition period, the UK will continue to enjoy the single market and custom union.
The Pound is staying fairly cool under pressure in the current market, having dipped against the US Dollar and then climbed its way back up again. Sterling strength is all down to any positive Brexit developments, and the Pound remains vulnerable to any shocks from difficult conversations and negative murmurs that filter from the negotiations. Recent weeks have seen some success for Sterling, however, as hopes for a Brexit transition agreement have helped the British currency to climb against a raft of major currencies, including the Euro, USD and Australian Dollar.
UK PM MARCH SPEECH REVIEW
Political risk has dominate proceedings at the end of the week, with Theresa May delivering her speech at Mansion House looking outlining her plans to get the deepest possible free trade deal achievable. The speech today comes after Donald Tusk warned during talks with Mrs May on Thursday that there could be no frictionless trade outside of the EU and that friction was inevitable. All of this is in a week that has seen US dollar gains and downside in Cable.