Britain’s prime minister is ready to play rough in Brexit talks by playing the card of a Brexit cliff-edge at the end of 2020 and Brexit linked fears return.
Reports that Britain’s prime minister was ready to play rough in Brexit talks brought December’s cross-market rally to a halt. According to such reports Prime Minister Johnson may use his control of parliament to stop any extension of the Brexit transition period beyond 2020.
After the UK leaves the EU on Jan. 31, it enters a transition period in which it remains an EU member in all but name. Both sides try to hammer out a deal on their post-Brexit relationship. A comprehensive free trade deal would encompass everything. However, the scope and sequencing of any future deal is still up for discussion.
In his boldest move since winning a large majority in last Thursday’s election, Johnson will use the prospect of a Brexit cliff-edge at the end of 2020.
The UK Prime minister will demand the EU gives him a comprehensive free trade deal in less than 11 months. However, analysts say a comprehensive trade deal with the EU could take years, not months, to negotiate. The EU hopes to start the trade talks with Britain by March.
START TRADINGForex – Brexit linked fears return to markets
U.S.-China trade optimism and reassuring Chinese economic data had driven markets high overnight. Investors were staying broadly optimistic over the tentative U.S.-Sino trade deal struck last week which capped the Japanese yen and Swiss franc.
The drop in the Australian dollar and the pound boosted the greenback with the U.S. dollar index trading 0.1% stronger against its rivals.
The Australian dollar was under pressure after the minutes of this month’s RBA central bank meeting suggested it might cut interest rates again when it next meets in February. Aussie fell nearly 0.5% to $0.6868.
The euro was broadly stable against the greenback at $1.1143, levels it has traded around since August.
The pound fell 1.3% to back below $1.32 and nearly 2% erasing Thursday and Friday’s post-election highs of just over $1.35. It was last down 0.9% at $1.3210, well off the 19-month high of $1.3516 hit on Thursday.
Against the euro, the pound tumbled 1.12% to 84.52 pence, having skyrocketed to a 3-1/2-year high of 82.78 pence last week.
Oil was nearing three-month highs in anticipation of growing demand from the world’s biggest economies. Brent crude ticked up for a fourth day at $65.52 per barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money