Just over two days since Brexit the European Union and Britain clashed over a post-Brexit trade deal on Monday.
Investors were relieved that the UK had finally exited the EU, ending years of financial and political uncertainty over the exit. But, beyond the symbolism of turning its back on 47 years of membership, little will actually change until the end of 2020.
Prime Minister Boris Johnson insists he need not sign up to the bloc’s rules. Brussels warn of tariffs and quotas unless he did. Britain wants to negotiate a trade deal by the end of 2020. Τhough EU leaders say the further Britain diverges from their rules the less access it will have to the EU market.
The European Union wants an ambitious zero-tariffs and zero-quotas trade deal with Britain. The choice for Britain, Johnson said, was between a deal like Canada has with the EU or a much more distant deal like Australia.
Trade talks will begin in March. After criticising his predecessor Theresa May’s approach in negotiating a divorce deal with the EU, Johnson is striking a much tougher tone. Sterling fell sharply on Monday after Prime Minister Boris Johnson set out tough terms for European Union talks.
START TRADINGForex – Dispute over Post-Brexit Trade Deal inevitable
Markets elsewhere showed signs of rebounding. However, investors continued to worry about the economic hit from a deadly virus outbreak in China. A total of 361 people has died in China from the coronavirus.
The dollar was up against a basket of rivals, with the dollar index up 0.3% to 97.685.
A recovery in the safe-haven Japanese yen suggested fears surrounding the spread of coronavirus in China were ebbing for now.
The Swiss franc, also considered a safe haven, was mixed, falling against the dollar but rising slightly versus the euro.
The euro weakened 0.3% to $1.1062.
The Australian dollar fetched $0.66945, up 0.1% on the day but holding near a 10-1/2-year low of $0.6670 touched last October.
Sterling fell as low as $1.3055, down 1.2% over Post-Brexit trade deal. The British currency undoing all of its gains following the Bank of England’s decision last week to keep interest rates on hold. Against the euro the pound slid to as low as 83.95 pence.
Oil prices fell on Monday, dragged down by concern over demand in China after the coronavirus breakout. Brent crude was down 48 cents at $56.14 a barrel by 1320 GMT, having earlier lost more than $1 to its lowest since January last year at $55.42. U.S. WTI crude fell 10 cents to $51.46 after hitting a session low of $50.42, also the lowest since January last year.
Gold fell 1% on Monday as China’s steps to protect its economy from the impact of the coronavirus outbreak. Spot gold fell as much as 1% and was down 0.8% at $1,577.11 per ounce as of 1321 GMT.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money