- The GBP / USD pair has stabilized just below the 1.3400 level as traders eagerly await the outcome of the Johnson and von der Leyen talks.
- The most likely outcome appears to be that they will agree to continue the intensified talks over the weekend.
The USD has been gaining ground in recent trading, which has pushed the GBP/USD even more from its previous highs. It fell as low as 1.3350 in recent hours, but recovered just below the 1.3400 level, as GBP traders remain on edge over the outcome of Wednesday’s discussions between British Prime Minister Boris Johnson and the President of the EU Commission, von der Leyen. Currently, the pound is trading with gains of about 0.3% or just over 40 pips on the day.
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Earlier in the day, an EU diplomat said the EU base case for tonight’s discussions between Johnson and von der Leyen is that the two will agree to continue talks and that the EU could still approve any Brexit deal. which was agreed over the weekend to the end of the month.
If talks are given the go-ahead to continue over the weekend, as appears to be the most likely course of action at this point, hopes that a deal can be reached are fading fast. Reportedly, the EU’s chief Brexit negotiator Barnier and other EU officials now view the chances of a deal being reached as very slim. UK sources have not been so pessimistic, but today in parliament the UK prime minister reiterated again his position that the UK is unwilling to give up any of its sovereignty in exchange for access to the EU market. , a position that ultimately appears incompatible with maintaining a free trade agreement with the EU.
On the slim chance of a breakthrough between Johnson and von der Leyen in the next few hours, the market reaction is likely to be jubilant. However, it is worth noting again that the entire EU will have to agree to whatever agreement Johnson and von der Leyen have reached; France has sounded particularly aggressive on this front, not wanting von der Leyen to be too “soft” on the UK.
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