The Brexit negotiations appear to have taken a sour turn as reports emerged that Theresa May refused to address the European Parliament in public and will only talk to its leaders behind closed doors.
It was thought that the Prime Minister has been invited to discuss the UK’s position on Brexit. This is likely to have disappointed many of the European Parliament’s members, especially at such a crucial time with the ‘great repeal bill’ being debated begins today. This is the mechanism for bringing the European law into UK law.
This all comes at a time when the UK and the currency market are desperately seeking some clarification on Brexit. EU officials have titled this as an own goal for the Prime Minister, as she defied following in the footsteps of Tony Blair and Margaret Thatcher. If PM’s in the UK view it as this rather than the UK’s best interests, this may well cause further pressure on the Prime Minister.
This European Parliament snub could have a very detrimental effect on the Pound, especially as minutes have emerged that EU negotiators have a very low opinion of chief UK negotiator David Davis. According to reports, Jean Claude Juncker was unimpressed with the first round of negotiations in July. If further reports emerge of further breakdowns in communication between the EU and the UK continue, this could certainly affect the Pound’s value.
For the moment, the markets have remained calm, Sterling lost some ground today against the Euro which was more due to Euro strength than Sterling weakness. The reason for this is that the Dollar actually weakened against Sterling as GBP/USD moved above 1.30 once more, however the EUR/USD moved largely in the Euro’s favour. This was due to Mario Draghi, President of the ECB delivering an upbeat speech regarding future EU monetary policy.
For now Sterling remains in limbo, as further clarity is needed regarding Brexit in order to really see the Pound strengthen. A key date for this month, related to Brexit will be September 21st when Theresa May is expected to reveal the progress made with the EU negotiations so far.