Brexit agreement "cannot be guaranteed" by negotiators

Negotiations on the Brexit agreement have yielded only disappointment but no results so far. This puts the British pound and stock markets under pressure whereas the US dollar is beginning to correct last week’s losses. According to EU chief negotiator Michel Barnier, the agreement cannot be guaranteed by the end of the year, and members of the EU bloc should start preparing for a hard Brexit.
 

10-hour discussions with no results

At a closed-door meeting on Monday morning, Barnier said roughly 10 hours of talks with his British counterpart, David Frost, and his team on Sunday had not brought about a breakthrough on issues in UK fishing and fair competition rules. He rejected claims that fishing had been almost agreed, despite the fact that the negotiating teams had been working until midnight. And it was precisely the disappointment from the absence of the breakthrough in discussions that had been reflected in the Monday’s markets where the pound lost over 1% and is heading for the worst day since September. According to Barnier, the talks are in the final and the deadline will take place on Wednesday.
 

More sources of uncertainty

The result is still uncertain and some countries and companies in the EU Member States have already started preparing for hard Brexit. Negotiations resumed on Monday, but the time remaining is critically short to reach an agreement by the end of the transitional period on 31st December. EU leaders will meet in Brussels on Thursday for a scheduled summit. Prime Minister Johnson's decision to enforce two controversial laws that violate the terms of the EU withdrawal agreement is adding even more pressure. The UK Government argues that new rules are necessary to secure intra-UK trade in the event that negotiations on future relations with Brussels fail. However, EU bosses have warned that ratification of any agreement on future relations will be impossible unless the United Kingdom repeals the controversial law.

By the end of the week, a relatively turbulent development can be expected on the pound, which will also be accompanied by a meeting of the ECB and the overall position of investors in the US dollar, to which investors return at the beginning of the week. The pound may have lost another 1-2% during the week if no breakthrough is reached in the negotiations on at least one of the key issues. The EU continues to demand clear guarantees from Britain and more compromises, which Britain has still not agreed to for months.
 

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