Boris Suffers Further Blip

Boris Johnson’s post-Brexit Britain has suffered yet another blow this week with US president Joe Biden downplaying the chances of the UK securing a stand-alone trade agreement with the US. While the UK continues to suffer a slew of Brexit related disruptions, from lorry driver shortages through to supply chain meltdowns, the UK PM was hoping that securing such a deal might help divert attention away from the obvious failures of Brexit and restore faith in his vision. However, once again, it seems that reality is diverging rather starkly from the initial vision.

UK & US Leaders Meet

Johnson is in the US capital this week for talks with Biden on several subjects including that of securing a trade deal. However, the UK PM himself sounded decidedly lacklustre over his prospects telling reporters before the talks that he didn’t think he would be able to secure a trade deal before the next elections as the Americans do “negotiate very hard”. Ahead of yesterday’s meeting, Biden himself said: "We're going to talk a little bit about trade today and we're going to have to work that through."

Biden Not Bothered

There has been a lot of talk recently around the lack of motivation in the Biden administration to get a deal done with the UK. Johnsons acknowledged this sentiment while talking with a reporter this week saying: "On the FTA [free trade agreement], the reality is that Joe has a lot of fish to fry… He's got a huge infrastructure package, he's got a build back better package. We want to do it, but what we want is a good FTA, a great FTA."

Johnson To Try Another Approach

In the wake of Brexit, the UK has so far secure new deals with Canada and Mexico, essentially renewing the deals it had in place before Brexit. There is now talk that the UK might try to join the existing trade deal in place between the US, Mexico and Canada or attempt to sign a series of smaller deals with the US. For now, however, Johnson’s vision of a first class, post-Brexit trade deal between the UK and US remains unfulfilled.

Technical Views

GBPUSD

Following the sell off from the test of the contracting triangle top, the market is now testing the bottom of the structure and with indicators turned lower here, there is risk of a move to the downside in the near term. The key level to watch is the 1.3570 level, a break of which will open the way for a test of 1.3461 next.