Currency Analysis Report 9/9/20 - Is Brexit In Danger???

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Almost four years after the United Kingdom voted to leave the European Union, Brexit will finally happen. The U.K. will still be subject to all E.U. laws and regulations until at least the end of 2020 and this transition period could be extended by up to two years. And the U.K. faces a more daunting task: securing an agreement on its future relationship with the E.U., including the finer details of trade, security and data sharing. If both sides remain stubborn, that two year extension will certainly be needed.

Negotiations have been slowed amid the coronavirus pandemic, but Boris Johnson's government has been clear on its refusal to seek an extension to the transition period which runs out at the end of the year.

The UK is hoping to strike deals on various matters including air transport, energy and law enforcement, but the EU insists that all key areas are treated in parallel.

Britain is reportedly planning new legislation that will override key parts of the Brexit Withdrawal Agreement - a step that, if implemented, could jeopardise the January treaty and cause frictions in Northern Ireland.

With just a few weeks to run until then, any negative Brexit-related headline prompts traders to sell the pound, already beset by woes.

Monday’s news “is just the cherry on top of the cake,” said Jordan Rochester, currency analyst at Nomura.

“We’ve had weeks of pretty negative stories about the UK doubling its fishing quota, which would be not agreed to by the EU. We’ve got the state aid regimes still not being laid out as well by the UK side. So I think sterling is going to underperform here,” he said.

Source

Monthly Chart (Curve Time Frame) - monthly supply is at 1.4800.