The UK general elections are approaching and markets feel content with Conservatives taking a majority in the British Parliament. This means that BoJo’s Brexit deal will finally pass the Parliament. UK PM Johnson said earlier that “we will leave the EU by the end of January if Tories win majority”.

As things stand, Boris Johnson has said that he will not extend the transition period – timeline to negotiate a trade deal – which runs out at the end of next year. But, it took Canada seven years of negotiations to finally reach a trade deal with the EU. So, the Brexit deal might finally pass the UK Parliament after the elections, but it means nothing unless they can agree to a future trade relationship with the EU.

Xavier Bettel, the prime minister of Luxembourg, yesterday urged the UK to accept the rules of the EU single market or face a cliff-edge Brexit at the end of 2020. He said that:

“We cannot accept cherry-picking. You decided to leave. I won’t accept that you destroy the single market. We have rules and you will have to accept these rules. It is not that the U.K. will change Europe.”

“If you ask for a new delay, because you think you’re going to have a better deal, then no. We have to respect procedures, but the fact is that we shouldn’t postpone it.”

So, it isn’t going to be a smooth road ahead for the UK and the GBP next year. They might reach a trade deal if both sides work really hard overtime next year, but it will be difficult, so there will likely be plenty of volatility in GBP pairs next year.