Pound drops off from highs
So far the United Kingdom has failed to reach an agreement with the European Union in order to move onto the next stage of Brexit talks, according to UK Prime Minister Theresa May. The announcement was made at a press conference this afternoon where she was joined by European Commission President Jean Claude Juncker. The announcement comes only 10 days before the EU summit (on the 14th-15th of December) and the deadline set by the European Union. The talks would then be pushed back until March and further weakness and negativity for the Pound would most likely ensue.
According to reports, the Democratic Unionist Party (DUP) were the reason behind why talks weren’t successful. This leads people to believe that the UK are willing to fulfil the Irish Government’s wish; however, the DUP quickly stuck their heels in, reacting angrily to reports of concessions on the Irish border. The Democratic Unionist Party’s support is vital to the success of the UK passing any Brexit legislation. Reports have emerged that Northern Ireland would all but in name, remain part of the European Union. This has led to other leaders – Scottish First Minister Nicola Sturgeon, Welsh First Minister Carywn Jones and London Mayor Sadiq Kahn all calling for similar treatment.
Brexit talks are expected to continue to dominate
Whilst this had initially caused the Pound to shed its gains, reports that a Brexit deal will still be agreed upon are keeping the Pound afloat. Positivity from both parties involved have helped keep investors hopes alive that a deal would be made in the up and coming days. I would expect the talks to dominate the headlines for the remainder of the week, with extreme volatility expected on any Sterling trades on any announcements, positive or negative.