The Pound has pushed lower today as Brexit talks appear to be stumbling again.
After the publication of the EU’s draft legal exit treaty, the EU chief negotiator (Barnier) re-iterated that a transition deal was “not a given”. He also stated that there were still “significant divergences” and that the UK needed to increase the pace of the talks.
Once again the Irish border issue continues to be a major area of contention. The detailed draft exit agreement contentiously suggests that a fall back option to avoid a hard border (if no deal), would essentially be to annex Northern Ireland from the rest of the UK and keep free trade on the island of Ireland. The main border between the UK and EU would therefore be across the Irish Sea. This has obviously met huge outcry from both Theresa May and the supporting DUP.
Although none of this should come as a major surprise, it has again drawn focus back onto the issue, and the markets – being fickle as they are – have taken this as a cue to sell Sterling. As a result, the GBP/USD has pushed down by over 1% today and trade close to a 6-week low. The GBP/EUR hit a 1-week low, having pushed down nearly 1-cent from this morning’s high.
Theresa May is due to make a key Brexit speech this Friday, where she will outline her vision for a deal and where she sees the future relationship with the EU. Without any new ideas, this could just end up being more of the same noise and therefore continue to keep dragging this whole story out, whilst the clock keeps on ticking