Britain exited the European Union on January 31st after the long period of planning and preparing. This date marked the finish of 47 years of membership. Meanwhile, UK leader Boris Johnson promised to start negotiations. It’s not clear yet how the post-Brexit era will play out in many important areas, including trade. Until that, the market moves at a slow pace, bulls waiting for new signs to act.
The first week after Brexit was relatively calm. GBP/USD markets have dropped to their lowest point of the year so far and remain so. The GBP/USD market fell below the significant benchmark of 1.30. Investors are hopeful that there will be some positive news on the geopolitical front on Monday, but nothing could be said for sure so far.
It seems the UK isn’t in a hurry to change its view on EU trade and relations moving forward. And there is also the case of coronavirus, which brings more stress on the market. With the world’s primary focus on China, the epidemic had a domino effect on the other countries’ stock markets.
Will the UK resort to a “Canada style” free-trade?
UK Prime-minister Boris Johnson is adamant that the UK will not be following the rules of the EU when it comes to trade agreements. He has proposed a “Canada style” free-trade agreement with the bloc. However, the EU doesn’t approve of this offer. They stated that it’s at best “ambitious” and underlined that they need to “level playing field.”
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Furthermore, EU Chief Negotiator Michel Barnier and UK Prime-minister Johnson appear to be on the whole different pages. If they can’t find the easy compromise, which seems almost impossible at this point, then the investors are in for the long, turbulent period. The next several months until December will be the most important in shaping the future landscape.