Brexit – Gaps Remain with a Sunday Deadline Now Looming

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On Wednesday, Boris Johnson and Britain’s chief negotiator Frost met with EU President Ursula von der Leyen and EU negotiator Barnier.

The initial meeting had been scheduled for just Boris Johnson and the EU President. Later in the day, however, both Frost and Barnier were invited.

Their inclusion had raised hopes of a more productive political dinner in Brussels. A return of hope towards a Brexit deal supported a 0.33% gain in the Pound on the day, which ended a run of 3 consecutive daily losses.

News from the meeting was less than positive, however.

Progress towards a Brexit deal was lacking, with a wide gap reportedly remaining on the 3 key obstacles to a trade agreement.

In spite of a lack of progress, both sides agreed to continue talks over the remainder of the week. This means that yet another EU summit will pass without a Brexit agreement.

The talk had been that today’s EU summit would be the deadline of deadlines. This has now slipped to Sunday, which is likely to be an unwavering deadline. Time has simply run out, with Britain’s transition period ending in just a few weeks.

The Brexit Hurdles

Boris Johnson’s election victory early this year had raised hope of an end to the Brexit saga.

9-months have now passed and Britain is barely any nearer to an agreement. Both the EU and Britain have stood firm on their positions vis-à-vis UK fisheries, competition, and policing.

With just 4 days until Sunday’s hard deadline, the markets will be looking for news of progress later today.

From Boris Johnson’s perspective, the stance remains simple. Britain cannot accept any terms that would continue to tie Britain to EU rules.

With French President Macron standing firm on the remaining issues, even German Chancellor Merkel took a stronger position, stating that unacceptable demands should not be accepted. In recent months, Merkel had looked to urge compromise before a recent speech by the EU President calling for the EU to protect the single market.

The Pound

At the time of writing, the Pound was down by 0.43% to $1.33388, reversing Wednesday’s gains.

With the EU Summit in focus today and Brexit talks to continue into the weekend, plenty of uncertainty remains.

When considering the chances of a no-Deal Brexit and BoE Governor Bailey’s view of a no-deal Brexit impact on the economy, a large degree of hope remains priced in.

Updates from today’s EU Summit and Brexit talks today and tomorrow will be key for the Pound.

A lack of progress by late Friday would likely test support for the Pound at current levels. That’s assuming that the Pound doesn’t take a hit later today…