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Pound Loses Some Momentum on News Brexit Deadline Due to be Pushed Back

 

Pound loses some ground

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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.

Talks in London are expected to run through the end of this week, sources on both sides told Reuters on Wednesday.

The news saw a high-flying Pound lose some earlier strength: the GBP/EUR exchange rate faded back to 1.1240, having been as high as 1.1271 earlier. The GBP/USD exchange rate faded back to 1.3262 having been as high as 1.3297 ahead of the headlines.

The report reveals EU ambassadors will not be updated on the talks at a regular meeting on Wednesday and the issue is now pencilled in for their meeting on November 18, a senior diplomat of the bloc said. EU leaders are expected to discuss Brexit in an online session of the European Council on November 19.

It was this meeting that the both sides had set as a deadline.

EU sources told Reuters they now expected negotiators to come up with an agreed text in the middle of next week, unless talks collapse or there is a breakthrough earlier.

“The real cut-off point is late next week,” said one EU diplomat.

Both EU diplomats said the agenda could be updated at the last minute should the negotiations yield a breakthrough or collapse.

A UK source told the newswire the negotiating teams' talks in London were expected to last through the end of this week.

We reported on Monday that analysts at Goldman Sachs continue to favour further strength in the Pound against the Euro, on the basis that a deal will be reached.

This bullish stance does however come with a caveat that talks could extend beyond next week and a deal is only struck in December.

Analyst Zach Pandl at Goldman Sachs in New York says a European Council Meeting scheduled for 10-11 December might come into focus, followed by the final plenary session of the European Parliament between 14 December and 17 December.

"This should provide a December backstop if talks extend for even longer," says Pandl.


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