The EU has announced that it is willing to extend the proposed length of time of the post-Brexit transition period if the UK wishes. The current plan is for a 21 month transition period to iron out any points of controversy on Britain’s exit from the EU.
Both sides are currently failing to come to any sort of deal and Theresa May has stated that the arrangement could be extended “for a few months”, if required.
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Brexit campaigners have not responded well to this suggestion.
May has said that she would not be extending the transition period but it would be beneficial to have the option which could increase the likelihood of solving the current impasse over the Irish border.
EU Council President Donald Tusk spoke following the Brexit summit and said there has been no breakthrough on the key point of how to avoid new visible border checks between Northern Ireland and the Republic of Ireland following Brexit.
President of the European Commision, Jean-Claude Junker has said the extension will be likely to happen as it will allow a longer time frame to put together a long-term deal.
May has stated that both sides are committed to getting a deal in place, adding there was a “very real sense that people want a deal done”, when discussing the Irish border situation.
Nigel Dodds of the DUP has said that extending the transition phase would cost the UK billions and not change the fundamental problems with the EU’s backstop plan.
The current impasse does not bode well for the pound and I would expect the volatility in recent weeks to continue as talks intensify. If you have to trade during this time period it would be wise to set realistic target levels and consider hedging. Let one of our brokers know your specific situation so we can assist in coming up with a strategy to maximise your return.
The Governor of the Bank of England Mark Carney is due to speak this afternoon and investors will be watching closely to see if there is any hint on future monetary policy. I would be surprised to see any big news; due the UK’s current economic situation there is little to justify a rate hike in the short term.
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