After a positive start to the day, sterling fell on Friday afternoon as Brexit deal optimism faded. After an initial uplift following the publication of a Brexit plan, the boost was short-lived as response from the EU was far from encouraging. Despite some saying the plan was a “step forward”, it was recognised that lots of work still needs to be done. Boris Johnson has said that the EU need to match the compromises made by the UK if a deal is to be reached.
It has been reported that the Prime Minister will send a letter to the EU asking for a Brexit extension, if a deal isn’t agreed by the 19th of October. This contradicts Johnson’s previous “do or die” mantra, however, Downing Street still insists that the UK will be leaving the EU on the 31st of October, and has said that the EU shouldn’t be “lured” into thinking that there will be a delay. The letter is a requirement of the Benn act, which was passed by MPs to try to avoid a no-deal scenario. It is still unclear if the government have a plan to bypass the Benn act and take us out of the EU “come what may” at the end of October.
GDP data for the UK will be released on Thursday, and is expected to come in at 0.0%. Sterling could possibly react if the figure is worse than expected.
