The British Pound ended last week as the worst performer amongst all the major currencies and is also in bottom spot on the month-to-date performance chart.
This morning, (542 days after the referendum) a UK government subcommittee began talks on what kind of relationship Britain wants to have with the EU. This comes one day ahead of a full Cabinet meeting to decide what it wants from the negotiations. The Brexit secretary, David Davis, has suggested a “Canada plus plus plus” deal, broadly based on the EU’s trade deal with Ottawa, but covering services, including financial services, and allowing closer ties because the volume of trade covered is so much larger.
Foreign Secretary Boris Johnson wrote yesterday in a newspaper article that, “What we need to do is something new and ambitious, which allows zero tariffs and frictionless trade but still gives us that important freedom to decide our own regulatory framework, our own laws and do things in a distinctive way in the future”.
Whatever is decided on the UK side, the EU still holds all the aces in the Brexit negotiations. According to The Times newspaper, Michel Barnier, the lead EU Brexit negotiator, told Prospect magazine that “no way” could there be a bespoke trade deal that mixed those that applied to Canada and Norway. “There won’t be any cherry picking,” he said.
The Prime Minister always gives a statement to the House of Commons after EU summits. These used to be extremely dull, with little information content, but they have now become Brexit updates and major Westminster events. A long time has passed since Foreign Secretary Boris Johnson’s confident claim that he was “pro-cake and pro-eating it” but this afternoon in London we’ll hear if Mrs. May remains similarly upbeat.
The Pound opens in North America this morning at USD1.3370 and EUR1.1335 with GBP/CAD at 1.7220.