Pound Tumbles As Tone Is Set for Trade Talks

In his first address since the UK’s official departure from the EU Boris Johnson outlined his plans to “Unleash Britain’s Potential” with an insistence that the UK will not be aligned with EU rules for trade and would prefer a Canadian style free trade agreement or no deal at all.

This statement was in stark contrast to comments made from Brussels by chief negotiator for the EU Michel Barnier who said a “highly ambitious” trade deal was available but “any agreement with the UK will have to ensure a level playing field” The intention being to prevent unfair competitive advantage that the UK could potentially enjoy if not operating within EU rules for state aid, tax, social, environmental and regulatory measures and practices.

Back in London and referencing the EU’s regulations the PM argued that UK standards are in many respects, better than the EU’s stating “as if it was only thanks to Brussels that we are not preparing to send children back up chimneys”.

These opening salvos in negotiations due to start next month have highlighted the gulf in expectations between the UK and EU and how difficult upcoming trade talks are likely to be. The comments from London and Brussels took the wind out of sterling’s sails with traders starting to price in the probability that the UK might actually leave the EU at the end of 2020 with no trade deal agreed.

In the last 24 hours the pound has dropped over 1% against the euro and 1.4% against the dollar. At the time of writing 1.1735 and 1.2970.

The figures are based on the live mid-market rate, correct as of 08:30 GMT on 04/02/2020, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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