Talking Points
- The British Pound is strengthening against both the US Dollar and the Euro as hopes rise that transitional arrangements will avoid a cliff-edge departure of the UK from the EU.
- There is also optimism that a US/UK trade deal will be reached soon after the divorce is completed.
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The British Pound strengthened against both the US Dollar and the Euro in London trading Monday as talks began between US and UK officials about a post-Brexit trade deal between the two countries and fears receded of a hard Brexit amid talk of an “implementation period”.
Strictly speaking, EU rules preclude a US/UK trade pact pre-Brexit but both the US and the UK seem keen to do the groundwork first. Liam Fox, the UK Trade Secretary,begins two days of talks in Washington Monday with his US counterpart Robert Lighthizer and it is expected that a working group will be created so a trade deal is ready to be signed immediately post-Brexit.
This idea has been supported several times by US President Donald Trump, who has said that a US/UK free-trade agreement will be a “very, very big deal, a very powerful deal, great for both countries and I think we will have that done very, very quickly.”
Meanwhile, UK Business Secretary Greg Clark said Monday that the British government will discuss a so-called implementation period later this year to avoid the cliff-edge departure that business organizations have warned against. In the markets, this led to a positive session for the Pound against the Euro and helped it extend its recent gains against the Dollar.
Chart: GBPUSD 30-Minute Timeframe (July 20-24, 2017)
Markets
Index / Exchange Rate | Change (Exchange Hours/GMT Session Rollover) | Market Close/Last |
---|---|---|
FTSE 100 | -1.02% | 7,377 |
DAX | -0.14% | 12,223 |
GBP/USD | +0.28% | 1.3030 |
EUR/USD | -0.21% | 1.1639 |
EUR/GBP | -0.45% | 0.8933 |
Upcoming UK/EU Event Risk
Events | Date, Time (GMT) | Forecast | Previous |
---|---|---|---|
German Ifo Business Climate Index (July) | Jul25, 0800 | 114.9 | 115.1 |
UK CBI Business Optimism (July) | Jul25, 1000 | 0 | 1 |
Bank of England Chief Economist Andy Haldane Speaks | Jul 25, 1700 |
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
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