The British Pound went lower against its main rivals on Wednesday following confirmation that EU and UK negotiators are unlikely to strike a post-Brexit trade deal this week.
The British Pound starts the new week with some modest gains against the Euro, Dollar and other major currencies, but the gains are too modest to make up for the sharp decline witnessed on Friday.
The Pound-to-Canadian Dollar rate more than unwound the last of its gains for the week on Friday as the strength of the Loonie collided with Brexit-inspired weakness in Sterlin, although with the clock running down rapidly the risk in the short-term could be that the Pound weakens further before any recovery.
EU and UK negotiators will meet for face-to-face talks in London on Saturday to try and thrash out a post-Brexit trade deal, but it looks as though significant disagreement remains over fisheries.
EU Chief Brexit Negotiator Michel Barnier has apparently called a meeting of EU fisheries ministers for Friday.
The British Pound started the new week higher amidst reports UK Prime Minister Boris Johnson was set to make a political intervention in Brexit trade negotiations with a view to achieving a deal by early next week, while foreign exchange markets were in a 'risk on' mood following vaccine news from AstraZeneca/Oxford University.
The EU's trade negotiation team has updated European politicians this morning, and confirmed there remains work to be done if a post-Brexit trade deal is to be agreed before year-end.
The UK and EU could sign a post-Brexit trade deal as early as next week, according to reports. However, contradictory briefings suggest negotiations can really run down to the wire and that the real deadline envisaged by the EU is December 31.
The British Pound starts the new week in distinctly mixed fashion by edging lower against the Euro and higher against the U.S. Dollar and a number of other major currencies.
Pound Sterling has reversed some of its earlier gains on headlines out midweek that the EU and UK likely to miss next week's deadline, but analysts say such a delay is unlikely to materially dent the currency's outlook.
A combination of rallying global stock markets and news that the UK might shift its position on the matter of fishing rights in ongoing EU-UK trade negotiations have conspired to push the Pound higher against the Euro and Dollar.
The British Pound remains a buy against the Euro with foreign exchange strategists at Wall Street bank Goldman Sachs, who remain optimistic that a deal will be struck between the EU and UK on a future trade deal.
It has emerged that the EU's Chief Negotiator Michel Barnier has given a downbeat assessment on the prospect of a post-Brexit trade deal being reached by the EU and UK, a development that will likely keep Pound exchange rates on edge over coming days.
The European Commission has released its latest economic forecasts for the EU, Euro Area and the UK, with projections built on an assumption the EU and UK will fail to strike a post-Brexit trade deal before year-end.
The British Pound has outshone the Euro and a host of other major currencies on news of progress in post-Brexit trade negotiations.
"We continue to see a path for a sharply higher GBP/USD cross into year-end—if several risk events cut in the right direction" - Goldman Sachs.
It is reported Friday that France is preparing to give ground on the matter of one of the main outstanding issues preventing negotiators from striking a post-Brexit trade deal: fishing.
The British Pound recorded its strongest daily gain against the U.S. Dollar, Euro and other major peers since March amidst an upsurge in optimism that the EU and UK were headed towards a post-Brexit trade deal.
The British Pound advanced in mid-week trade in the wake of a fresh overture from the EU's Chief Negotiator Michel Barnier, which have raised the prospect of talks restarting and a deal being agreed over coming weeks.
The door to further gains in the British Pound were opened by developments at the start of the week that saw the EU and UK effectively commit to an intensification of Brexit trade negotiations, erasing fears that the UK would walk away from talks.
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