The British Pound fell to a six week low against a stronger dollar on Tuesday morning, as PM Johnson looked to reinforce his deal on terms of Brexit withdrawal.
Since the historic decision was made on Friday, the Pound has been up and down over hopes that Boris Johnson could finally deliver his December election promise.
Brexit had been dominating British news headlines since June 2016, when on a Friday morning the final results of the referendum had concluded that Britain would be terminating their relationship and ties with the European Union.
After years of toil, strife and elections the deal has finally been passed in both Westminster and Brussels, however the British Pound has not taken to this too well.
Yesterday, it was reported that the EU and Britain had not seen eye to eye over a post Brexit deal, as the two parties laid out very different strategies for UK-EU relations going forward.
On Monday, the Sterling lost 1% against the Dollar and the Euro and this had continued to decline across Tuesday morning.
Notably, the Pound slipped 0.4% against the dollar, to $1.2942, whilst being matched up against the Euro the slip was slightly less. The Pound dropped 0.3% versus the Euro to 85.35 pence, which saw its weakest since January 21st.
Britain and the EU still have a long road ahead, indeed nine months of negotiations are set to take place where every policy, detail and fragment will be thoroughly scrutinized before a final withdrawal agreement is reached.
PM Johnson has reinstated his intentions to not bow down to the needs of the European Union, and has told the British public that the withdrawal bill will be done on the terms of British politics and British needs – a rather risky approach when you consider that the EU hold the high hand.
The EU has warned Britain that access to the Single European Market will depend on how much Britain can work with the EU to reach a ground which benefits both parties.
“Despite Brexit being officially delivered, for markets, this is not the case,” analysts at RBC Capital Markets said in a note.
“While the two documents released (by the UK and EU) should clearly be seen as an opening gambit only, it drives home the point that reaching an agreement in a quite short span of time appears ambitious and might harbour some downside risks to the UK economy (and assets as well as sterling) as the year progresses.”
British Politics enters a very interesting time, and we could be entering a year full of stops and starts. The British Pound will also see sprites of confidence and periods of bruising, however traders will remain cautious.
