GBP Downside Pressure with No Brexit Talk Extension Request from UK Government Yet

GBP has been under some downside pressure in early trading on Monday, in line with a generally stronger dollar that is being observed.

The focus will be largely picking up around the Brexit talks, which remain at a stalemate, with the lack of progress between UK and EU officials. There are key sticking points that continue to serve as barriers in the way of an agreement.

The UK government remains firm on their stance that there will be no extension to the post-Brexit transition period. David Frost, UK Brexit chief negotiator, will be issuing a fresh warning to EU’s chief negotiator, Michel Barnier, ahead of the third negotiating round, that progress will need to be made on the deadlocked trade talks this month. Johnson and his part will not be asking for any delays in these discussions.

Over the weekend, German Foreign Minister Heiko Maas said there is an increasing risk of a hard Brexit, given that so far on the future trade relationship the talks had yet yielded hardly any progress.

He said:

The British government is still refusing to extend the deadline. If it stays that way, we will have to deal with Brexit in addition to the coronavirus at the turn of the year.

What does this mean for the market?

Any GBP rallies will remain vulnerable to being sold, given the caution ahead of the third round of negotiating. If a further lack of progress is seen, then downside pressure will very likely start picking up much pace against GBP.



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