26/09/2018
EU - UK informal meeting
The European Union and United Kingdom held an informal two days meeting on September 19 and 20. The session took place in Salzburg, a city in Austria on the border with Germany. Participants of the summit included EU heads of states/governments as well as UK Prime minister Theresa May. Topics of discussion included, migration, internal security and Brexit.
The British pound experienced some wild swings throughout the meeting of the leaders. Initially markets were hyped about the informal meeting with a depreciation of the Dollar against the Pound, as market participants were expecting a breakthrough in negotiation talks between the UK and EU.
The main topics that the two entities had to resolve was a trade agreement with the European Union and the Irish border (trade agreement) as Ireland wants to stay in EU while still being a part of the UK. On the first day of the meeting leaders failed to make any significant progress. President of the EU commission Jean Claude Juncker added to the negative mood that a brexit deal was “far away”. Other remarks from Irish PM was that there’s been no progress in talks since March, while UK PM added fuel to the fire by keeping a harsh stance against EU leaders. Resulting in a weaker Pound for the day.
Following up the day after Thursday, September 20, the EU put more pressure on May saying that a deal will only happen if UK makes more concessions. The PM of the UK promised a new brexit offer before the end of Salzburg meeting. The pound finished the day stronger amid May’s remarks.
On Friday September 21, the UK gave a reply to EU leaders that the UK must be respected and that the offer made by UK would not have been rejected by any other country. Instead UK PM demanded that the EU changes its own agenda resulting in the weakening of the pound by 1.3% against the dollar.
Further developments this week could create more wild sings for GBPUSD. EU summit in 18th and 19th of October will also play a key role for Brexit, as November will be the deadline for a divorce deal.