Market news
16.10.2020, 12:03

European session review: GBP retreats as UK PM Johnson's calls to get ready for no-deal Brexit

TimeCountryEventPeriodPrevious valueForecastActual
09:00EurozoneTrade balance unadjustedAugust27.715.114.7
09:00EurozoneHarmonized CPI ex EFAT, Y/YSeptember0.4%0.2%0.2%
09:00EurozoneHarmonized CPISeptember-0.4%0.1%0.1%
09:00EurozoneHarmonized CPI, Y/YSeptember-0.2%-0.3%-0.3%

GBP fell against other major currencies in the European session on Friday after British prime minister Boris Johnson concluded that the UK should get ready for an Australian-style exit from the EU, i.e. an exit without a comprehensive deal on post-Brexit relations between the two sides. "Unless there's a fundamental change of approach, we're going to go to the Australia solution, and we should do it with great confidence," Johnson added. 

On Thursday, the EU leaders sent a firm message that the UK had to compromise on the key outstanding issues - [fisheries, level-playing field and governance] - if there was to be a trade deal. The UK chief Brexit negotiator David Frost said he was "surprised" and "disappointed" by the position of the EU leaders at the summit in Brussels.

Today's announcement by the UK's prime minister disappointed markets, putting pressure on GBP. However, the fact he did not say the UK would quit the talks, capped further decline in the pound.

In response to Boris Johnson's statements, the European Commission president Ursula von der Leyen said that the EU negotiating team would go to London next week to "intensify" talks. "The EU continues to work for a deal, but not at any price. As planned, our negotiation team will go to London next week to intensify these negotiations," she tweeted.

Earlier today, the  RTÉ News reported that a number of the EU sources said that the block's chief Brexit negotiator Michel Barnier would seek "to use the leverage of the EU's energy market as a potential way of unblocking the UK's resistance to granting European fishing fleets ongoing access to British waters".

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