Tensions between the UK and EU are building, could this result in a no deal for the UK?
Home Secretary Amber Rudd yesterday said the reports from the German newspaper regarding Britain’s ignorance of how Brussels works were “tittle-tattle”. Furthermore she went on to say that it was not the right way to go about negotiations and Britain was committed to negotiating in “good faith”. Prime Minister Theresa May this afternoon dismissed the comments as “Brussels Gossip”, with No 10 sources suggesting the UK won’t get drawn into a Brexit Briefing war.
The UK Manufacturing Purchasing Managers Index came in at the highest level in 3 years with an expected reading of 54 for April being trumped by 57.3, it is especially worth noting that a reading above 50 is considered positive. Whilst this had a fairly limited effect on Sterling, the strength of the UK economy is still clear despite a drop in GDP last week.
Tomorrow is the turn of PMI Construction data which is expected to show a contraction from March, however if there was to be a significant jump which has happened recently then Sterling could get a boost into the 1.19’s once more.
Whilst the discussions are still in very early stages there could be cause for concern that in the next 2 years, the talks wont culminate in a deal. Whilst Juncker’s dinner reports could be un-true there is a consensus amongst EU leaders how to progress with negotiations. The focus will be initially on the bill the UK should pick up, then citizenship rights with trade coming last. Considering the length of time trade negotiations have taken the likes of Canada and Japan with the EU, time spent on other topics could mean a deal is a lot further than the UK Government expect.
If you do have a Sterling requirement in the future please get in contact with your broker. We have seen a recent jump in Sterling in the last few weeks however there appears to be resistance just below the 1.20 level. If you do have a requirement we may not see the rate move much higher for a significant period.
If you have any questions regarding this report, or would like to talk to someone regarding a currency transfer, please email me at email@example.com or call our trading floor.
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