Boris Johnson finally passed the Brexit deal in the British parliament after winning UK elections in December by a wide margin. The GBP rallied more than 5 cents higher after the elections. But, the UK still needs a trade deal with the EU by the end of the year, when it is supposed to leave the block. Without a deal, it would be just a plain hard Brexit, which would be terrible for the economy and the GBP.
So, the UK has been hoping for a Canada-style trade deal adjusted for Britain, or a Norway type deal. But, the EU’s chief Brexit negotiator Michel Barnier was talking about UK-EU trade yesterday and he dismissed a Canada type trade deal. This should be negative for the GBP and GBP/USD has made another leg down today. Below are his main comments:
- EU ready to offer UK super preferential access to EU markets
- EU-UK trade talks to be complicated, not much time to strike a deal
- Modern trade deals are about ensuring high standards for social and labor fields
- Should be no problem for UK to agree on ground rules
- Every preferential trade deal set terms for opening up markets
- No single template for EU trade deals
- UK is not Canada
- EU cannot give UK market access without strong fair competition guarantees
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