Pound Turns Weak after Delayed EU UK Talks

European Union - United Kingdom flagsYesterday, the market was optimistic that the leaders of the European Union would go ahead with their trade talks with the United Kingdom and their future relationship. The statements made at the end of Brussels Summit acknowledge there has been good progress between the negotiators of UK and EU.

Unfortunately, there has been a delay in the trade talks which is postponed until the end of March 2018. The market is not happy with this unexpected and unfortunate delay in the trade talks and this, in turn, has made Pound weak.

Donald Tusk who is the President of the European Council said that at the end of the European Union meeting, an acknowledgement of sufficient progress would be made. So, the market was not curious and happy about the declaration.

Instead, the financial market is looking to get updates on the trade talks between UK and EU which did not take place in the first place. European Union has set a deadline for Britain to decide the kind of trade dealing it wants after Brexit. Investors are worried because according to EU, United Kingdom has no idea regarding the trade deal it wants after the departure.

Bloomberg TV Markets and Finance

On Friday, Theresa May, the Prime Minister of United Kingdom said that the government is working hard to secure a good deal with European Union where they would get complete control over the immigration and other crucial matters.

Theresa May made the following comment on Twitter:

The financial markets are not happy because according to the analysts there could be a disorderly Brexit due to delay in trade talks with EU and UK. The trade deal has to be submitted to European Council before October 2018 summit so that the agreement could be placed before March 29, 2019.

Once the agreement is approved by the European Council, all the member states in the Parliament should ratify it. In addition to this, the guidelines set by the European Council said that any trade deal could only take place when the United Kingdom becomes the “3rd Country”. So it is imperative that trade agreement should be prepared before Brexit exit in March 2019.

It is to be noted that on Wednesday, an amendment to European Union Withdrawal Bill was passed by the “UK House of Commons“. It is a severe blow to the UK Prime Minister because this bill could force European Union to put pressure on Theresa May to enter into new trade deals with Brussels.

These developments are likely to make the Pound currency bearish. But, the UK Prime Minister has received unflinching support from Paolo Gentiloni, the Italy Prime Minister who wanted a “tailor-made” deal for the UK during Brexit exit. This is a contradictory statement of Michel Barnier who is the chief European Union negotiator. It is likely that Pound would continue to remain weak until there is any improvement in the trade talks with EU and UK.

Top10FX.net Editor

Top10FX.net Editor

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