Pound unexpectedly falls after Brexit deal

Financial and commodity markets analytics

The British pound is under further pressure today after last Fridays losses as investors brush off a deal struck over the weekend that set the stage for Brexit negotiations to continue.

The agreement reached over the weekend between the EU and the UK  about the Irish border, divorce settlement and other things has now paved the way for talks to begin on a free trade agreement between the prospective parties and some now say the hard part has just begun.

“So much time has been devoted to the easier part of the task and now to negotiate a transition arrangement and the framework for our future relationship we have, de facto, less than a year," said European Council President Donald Tusk

For the time being, the uncertainty surrounding Brexit may sink into the background and as the year comes to an end it may be economic data that drives the sterling.

Of interest, will be the next moves from the bank of England starting with their policy meeting this week.

No changes in rates are expected so the following statement will be closely monitored to see when the central bank plans to tighten monetary policy in the nearest future.

“As negotiations continue in the background, Brexit fatigue may set in among investors, with more emphasis placed on the day-to-day data,” said Karen Ward, chief market strategist for Europe and the U.K. at JP Morgan Asset Management.

Another thing that may possibly destabilize the pound as the year finishes is an expected leadership challenge against Prime Minister Theresa May for the UK’s top Job with foreign minister Boris Johnson said to be waiting in the wings ready to pounce.


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