Time Running Out
As we move further into Q4 and further towards the end of the year, the likelihood of the UK and EU agreeing a trade deal remains very difficult to gauge. The UK PMs attempts at intimidating the EU via the use of aggressive deadlines and ultimatums has largely fallen flat. Ahead of the pandemic, Johnson had called on the need for the outline of a deal to be agreed by June. Following the pandemic and his own struggles with the virus, this deadline was kicked back to the end of July and then the middle of October. However, following a meeting with European commission president Ursula von der leyen, this was then extended by a month.
So, with the next deadline (which would technically only be a month ahead of the actual transition phase deadline of December 31st) now presumably around a month away, have we seen any progress? The truth is, not much. While some compromises have reportedly been agreed upon, the two sides still remain far apart on several key issues.
Barnier Calls For Compromise
Speaking in European parliament this week, the EU’s chief negotiator Michel Barnier said: “Despite the difficulties we’ve faced, an agreement is within reach if both sides are willing to work constructively, if both sides are willing to compromise and if we are able to progress, on the basis of legal texts, and if we’re ready over the next few days to resolve the trickier subjects, because time is of the essence.”
Johnson Abandons Talks
Despite Barnie’s optimism, the talks are not in a good place. Boris Johnson abandoned talks last week over claims that the EU was not will to intensify talks to the level he deemed appropriate and, as yet, talks have yet to resume. On the UK’s behalf, with the House of Lord’s voting down the government’s internal market bill (marking the largest government defeat in 20 years) the UK has lost a key part of its arsenal. For now, Johnson is adamant that there can be no more talks unless the EU affects a significant shift in its negotiating stance while Barnier is insisting that the two sides make the most of the little time they have left.
From a technical viewpoint. EURGBP continues to trade within the broad bullish channel which has framed the majority of this year’s price action. While within the channel, the medium term view remains bullish. However, should the channel low break, attention will shift to the .8861 level, a break of which could signal the start of a much deeper correction in EURGBP.
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