Pound Strength to Fade as No-Deal Brexit Risk Grows, Experts Warn By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound marched higher against the dollar on Tuesday, as the U.K. and EU prepared to get post-Brexit talks underway, but an analyst warned that sterling’s strength will fade as time is running out for both sides to strike a deal.

rose 0.60%, to $1.2570.

With the clock ticking down on the opportunity for the U.K. and EU to agree a trade deal before the Brexit transition ends in December, sterling is likely to weaken, RBC’s Adam Cole warned.

The U.K. and EU have struggled to find a compromise on key sticking issues including the level playing field, security and fisheries. Ahead of post-Brexit talks, set to get underway on Wednesday, both sides have given little sign that the deadlock will be broken.

The EU “wants an agreement … but not at any price,” EU negotiator Michel Barnier said.

RBC has warned the threat of a no-deal Brexit is growing. “As time ebbs away and the two sides remain far apart, risks of a no deal, or a deal on unfavorable terms for the U.K. are growing.”

For the fourth quarter, RBC sees GBP/USD falling to 1.22 from 1.2574 at present and expects the currency pair to continue to fall in 2021 as the U.K. may require a weaker currency to prop up the economy.

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Almost a third of German firms expect no-deal Brexit: survey By Reuters



© Reuters. FILE PHOTO: British PM May meets German Chancellor Merkel to discuss Brexit in Berlin

BERLIN (Reuters) – Some 30% of German companies fear Britain and the European Union will fail to reach a deal on their future relationship before a transition period that ends on Dec. 31, a survey published on Friday showed.

The May survey by accounting firm Deloitte and German industry association BDI of 248 German companies with interests in Britain found that 25% expected talks to be extended.

About 26% said they expected the two sides to reach a free trade deal by the end of the year and 18% said they believed the EU and Britain will reach a basic framework agreement that will be finalised next year.

Britain and the EU, which remain far apart with only a few months until a deal must be reached, have intensified talks on a trade deal that would replace ties severed by Brexit.

A transition period, during which Britain remains in the EU single market and customs union, expires at the end of the year. A no deal is a scenario feared by many firms as it would translate into high tariffs on products and services and cause major disruptions to the movement of people and goods.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Pound Hobbles to Second-Straight Weekly Loss in a Month on Brexit, Virus Jitters By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound suffered back-to-back weekly losses against the greenback for the first time in more a month, and experts warn the rout is far from over as the risk of a no-deal Brexit and the potential for a second Covid-19 hit to the economy will offset monetary stimulus from the Bank of England.

fell 0.52%, to $1.2360, and remains on track to post a second-straight weekly loss for the first time since May 10.

The pound is likely to continue to cede ground to the dollar as the Bank of England’s recent actions may not be enough to offset the economic impact from virus and the risk of a no-deal Brexit, said ActivTrades.

The Bank of England decided earlier this week to slow the pace of its bond-buying program from the current £10-to-11 billion run rate per week.

The sour turn in sentiment on sterling followed better-than-expected U.K. retail sales, released earlier today, that sparked some hopes that the economy was on the mend following reopening measures.

“The country is affected by the deadliest coronavirus outbreak in Europe, its shell-shocked economy may soon be facing a no-deal Brexit and potentially a second wave of the disease,” ActivTrades analyst Ricardo Evangelista said.

The weakness in cable was also exacerbated by an uptick in demand for safe-haven following a rise in Covid-19 cases in the U.S., China and other parts of the world.

Against the backdrop of rising infections, and without the prospect of a vaccine anytime soon, some are worried the economic recovery is likely to stall.

“If there is a second wave, I would expect the unemployment rate to climb again. I think the real number today is around 20%,” Federal Reserve Bank of Minneapolis President Neel Kashkari said on Twitter.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pound Cedes Further Ground Against Dollar as Brexit Worries Resurface By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound extended losses against the dollar on Thursday as signs the U.K and EU relationship remains fragile sowed the seeds of doubt over whether the U.K. will be able to wrap up a post-Brexit deal before the year-end deadline.

The EU said it would sign on with the U.K.’s plan to offer traders a six-month grace period to pay tariffs next year after the Brexit transition period ends.

fell 1.08%, to $1.2419

At the end of the Dec. 31 transition period, the EU said it would impose full customs controls and checks on U.K. goods in 2021, Bloomberg reports.  

The U.K. said that in the first half of 2021, most firms moving goods into Britain would get six months to pay any tariffs due, even if a post-Brexit deal is not reached.

Signs that the U.K.-EU relations still remain fraught with completion has sowed the seeds of doubt over a potential trade deal, cooling some of the recent optimism reported earlier this week.

U.K. Prime Minister Boris Johnson said earlier this week, he would work with the EU to find common ground to break the deadlock. Johnson also claimed that there was no reason why the outline of a Brexit deal cannot be agreed to by the end of July. 

The EU has suggested Oct. 31 as the latest date a deal can be reached to allow ample time for member states to ratify the deal before the end of the transition period.

The fall in the pound also comes in the midst of dovish commentary from the Bank of England.

The Bank of England held rates steady at historic lows of 0.1% and ramped up its bond purchases by £100 billion, as expected.

The central bank said it stands “ready to take further action as necessary” to support the economy and boost inflation to its 2% target.

“The overarching message remains ultra-accommodative with indications of further measures to come to stimulate growth in the second half this year,” Saxo Bank said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Cable Bounces From Lows as U.K-EU Agree to Speed Up Brexit Talks By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound jumped from session lows against the dollar on Monday as the U.K and European Union agreed to intensify post-Brexit talks. Prime Minister Boris Johnson stoked hopes that an outline of a deal could be reached by the end of next month.  

rose 0.37% to $1.259 from a session low of $1.235.

After the latest series of U.K.-EU trade talks failed to yield any progress, Johnson said he would work with the EU to find common ground to break the deadlock. The cautious optimism on a deal comes as the U.K. on Friday said it would not extend trade talks beyond December.

The prime minister added that he sees no reason why the outline of a Brexit deal cannot be agreed to by the end of July.  The EU has suggested Oct. 31 as the latest date a deal can be reached to allow ample time for member states to back and ratify the deal before the end of the transition period on December 31. 

Post-Brexit talks have been held back by a lack of compromise from both sides on the terms of a future agreement concerning “level playing field” conditions – a set of common rules to ensure firms in the U.K. and EU compete on an equal footing.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pound’s Three-Week Rally at Risk as Bearish Bets Rise on Brexit Worries By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound fell sharply against the dollar on Thursday, and risks an end to its three-week winning streak as bets against sterling hit their highest in eight months amid ongoing Brexit worries.

Currency speculators have raised their bets against sterling, ING said, citing data from the Commodity Futures Trading Commission. Bets on a decline in sterling rose to their highest since November.

Growing Brexit worries have soured sentiment on the pound as the risk of the U.K. leaving the EU without a trade deal increased, ING added. “Despite markets having become less complacent about the risk of a no-deal exit, we still see some room for additional stress to be built into sterling.”

The U.K and European Union have made little progress on post-Brexit talks so far, amid key sticking points including future fishing rights in U.K. waters, foreign policy, and defense.

Both the U.K. government and the EU have until the end of the month to decide whether to extend the deadline for negotiating a trade agreement should be extended beyond the end of December.

The pound, which has recently followed risk assets higher, was also shunned in the wake of a plunge in global markets as investors assess whether equity markets have run up too fast, too soon.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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EU sees path to Brexit compromise if UK more realistic, adviser says By Reuters




DUBLIN (Reuters) – The European Union sees a path towards a compromise on a trade deal with Britain but London must first be more realistic in what it expects to achieve, an adviser to the EU’s chief trade negotiator said on Thursday.

Britain left the world’s largest trading bloc on Jan. 31 and has made very little progress in talks about a Brexit free trade agreement, negotiators from both sides concluded after the latest round of talks on Friday.

Stefaan de Rynck told a virtual Irish conference that Britain had shown a lack of serious engagement on a number of issues and the talks needed to be unblocked.

The areas where the EU was seeing this were in regard to standards for open and fair competition, fisheries, an overarching governance structure, and on judicial and law enforcement co-operation, De Rynck said.

“This may be a tough message but at the same time, we can see the trajectory of compromise,” he said. “We have, like in some fairytale, put out some stones that show you the path to a compromise),” he said.

Chief negotiator Michel Barnier said on Wednesday that Britain was seeking a trading relationship with the EU that was too close to that of a member state, urging London to adjust its demands in the four months left to reach a deal.

“If we get to the point where the UK changes its approach and becomes more realistic in what it can achieve, then I think we can quickly go on a trajectory for a compromise. We are certainly willing on the EU side to walk that trajectory,”

De Rynck said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Cable Pares Gains After U.K. Dismisses Report of Compromise on Brexit Talks By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound eased from one-month highs against the dollar on Tuesday, after failing to break a key technical trading level after the U.K. dismissed reports that Prime Minister Boris Johnson was ready to compromise on key sticking points that have stifled progress in post-Brexit talks.

rose 0.34% to $1.2541, but had jumped as high as $1.2575, testing its 100-day moving average, a key technical level at around $1.2573.

The U.K. has expressed a desire to take control over access to its waters and fish when the transition period ends, rather stick with the EU’s Common Fisheries Policy, which set fishing quotas among EU member states.  

The Prime Minister’s official spokesman reportedly said that reports suggesting the U.K. is ready to compromise on fisheries and level playing field rules was “wishful thinking by the EU.”

“We have always been clear there is no question of splitting the difference on level playing field and fish,” he added. 

The remarks added to growing concerns over a lack of progress on negotiations so far, ahead of the fourth round of post-Brexit talks, which get underway today before both sides take a break to assess progress.

With the clock running down on the end of June deadline for U.K. to request an extension on trade talks of up to two years, many have warned the path ahead for sterling will likely be fraught with challenges amid a weaker economic backdrop.

Data on Tuesday showed a sharp fall in U.K. mortgage approvals in April, and house prices suffering the steepest monthly decline in 11 years.

“There are significant headwinds to demand in prospect–higher unemployment, falling wages and significant economic uncertainty,” HSBC said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pound Investors Have Too Much on Plate to Obsess About Brexit By Bloomberg



© Reuters. Pound Investors Have Too Much on Plate to Obsess About Brexit

(Bloomberg) — Even with the risk of a hard Brexit hanging over their heads, pound traders seem to be looking the other way.

The currency touched a three-week high against a weaker dollar, one day before fraught trade negotiations resume between London and Brussels. A gauge of sentiment in sterling over the next month, which covers the deadline for an extension to the U.K.’s Brexit transition period, is the least negative since late March.

It’s a sign Brexit has lost some of its power to rattle investors, as concerns shift to the economic impact of the coronavirus pandemic and the possibility of a second wave of outbreaks after the U.K.’s lockdown eases.

“It has been a little surprising, frankly, that the foreign-exchange market has been as willing as it has to give sterling a pass this time around,” said Ned Rumpeltin, European head of foreign-exchange strategy at Toronto-Dominion Bank. “The virus and its aftermath remains the main focus for markets.”

The rose as much as 0.7% to $1.2426 on Monday, the highest since May 11.

Few analysts expect a political breakthrough this week. There could be damaging headlines for the process in coming days after the bloc’s chief negotiator Michel Barnier told the Sunday Times the U.K. needs to be “more realistic” in its demands.

Still, there’s been no spike in the cost of insuring against a swing in the pound against the dollar in options. For the next month, it’s hovering near the lowest level since early May.

That contrasts with the roller-coaster ride suffered by the pound throughout 2019 on fears of a no-deal Brexit and turmoil in Parliament.

Traders have stopped hanging on the words of lawmakers and are instead scrutinizing comments from Bank of England policy makers on the possibility of negative interest rates, which have weighed on the currency. It also narrowed the spread between 10-year gilt and bund yields to the smallest gap since since 2016.

Negative rates may become unavoidable especially if there is a no-deal Brexit at the end of the year, said Christian Schulz, director of European research at Citigroup Inc (NYSE:). Such a move by the BOE could lead the pound to revisit 35-year lows hit in March, according to Lee Hardman, a foreign-exchange strategist at MUFG.

Investors are betting the U.K. will join the negative-rates club by the end of February, according to overnight interest-rate swaps. Last month, the market saw such a move in November this year.

©2020 Bloomberg L.P.

 

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Cable to Remain Range Bound Amid Brexit Uncertainty, Analysts Warn By Investing.com


© Reuters.

By Yasin Ebrahim 

Investing.com –  The pound was roughly unchanged against the dollar on Tuesday, but hopes that cable will turn in a strong performance in the coming months are unlikely as Brexit-related uncertainty will keep a lid on upside amid signs of little progress on U.K-European Union trade talks.

Ireland’s Foreign Minister Simon Coveney reportedly flagged concerns that the U.K. and EU are likely headed for a collision on Brexit talks unless significant progress is made on negotiations.

rose 0.05% to $1.2447.

Worries are mounting that Britain could leave the EU without a trade deal as the U.K. has insisted it would not seek to extend negotiations beyond the transition period, which ends on Dec. 31.

The U.K. and EU have until the end of June to agree to extend trade talks beyond the end of the year.

Without a trade deal, many expect Britain is set for economic hardship as the country would likely have to adopt less-friendly trade terms, set by the World Trade Organization.

The uncertainty around the progress of Brexit talks “threatens to weigh on investment and on GBP in the coming months,” Rabobank warned.

The stuttering start to the week comes days ahead of the Bank of England policy meeting on Thursday, though the meeting is unlikely to have a meaningful impact, Bank of America (NYSE:) said, estimating that GBP/USD will trade at the lower end of the recent $1.22-to-$1.26 range this month.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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