Blog: Brexit, the EU Summit, and the Pound – Boris Johnson to Announce Next Steps – FX Empire

Boris Johnson and the Pound

On Thursday, the Pound fell by 0.79% to end the day at $1.2909. It could have been much worse, with the Pound having visited sub-$1.29 levels before finding support.

For the day ahead, however, it all hinges on Boris Johnson and his view on the outcome of the EU Summit.

EU negotiators believe that talks can continue through to the middle of next month. Johnson’s latest deadlines suggest that Britain thinks otherwise. It is no coincidence that the EU’s mid-November timeline comes after the U.S Presidential Election. There is a view that the EU is stalling on the hope of a Biden victory. Johnson would lose Trump’s support, which could change the shape of negotiations.

Today’s comments from Downing Street will be pivotal, therefore, in what lies ahead.

If Boris Johnson agrees to extend talks for an additional 2-weeks, the EU may consider this as a small victory.

An unwillingness to yield on demands to access UK fisheries and a willingness by the British government to extend talks suggests the possibility of compromise.

It also means that the EU, and not Britain, will have greater control over the timelines for any remaining negotiations. If that proves to be the case, then talks can drag on until mid-November.

While this may ease some pressure on the Pound, it is worth noting that EU member states must now prepare for any eventuality. Perhaps a hint of submission that there may be no favorable outcome to further talks.

At the time of writing, the Pound was down by 0.06% to $1.2894, recovering from an early low $1.28864.

A decision by Boris Johnson to pull the plug on Brexit and further talks will send the Pound into a spin. Despite the outcome of Thursday’s Summit, hope has continued to prop up the Pound ahead of Johnson’s announcement later today.

It could be another flash crash or a move back to $1.30 levels and perhaps higher…

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