Yesterday, the pound weakened to pre-election lows and it is still low this morning as the government said it will try to illegalise an extension to the Brexit transition deadline. After leaving the EU on the 31st of January, the Prime Minister will have to negotiate a trade deal with the EU, which originally had a flexible deadline of December 2020. However, the government now wishes to make this a hard deadline.
This potentially brings back the threat of a no-deal Brexit, as, if a deal isn’t ratified by the end of next year, then the UK will have to leave without a deal. This possibility and increased uncertainty don’t tend to fare well with the pound.
As the general election results emerged at the end of last week, business groups urged for negotiations to begin, expressing concern that the UK could abandon the EU’s trade agreements before making its own. The director general of the Institute of Directors, Jonathan Geldart, said that “our members have made clear that the content and shape of any new deal are much more important than simply the speed in getting there.”
A new Speaker of the House of Commons, Sir Lindsay Hoyle, was elected yesterday, and Johnson made a limited re-shuffle to the cabinet.
Today, they’ll be a series of data releases for the UK including inflation rate figures and retail price index. Yesterday’s data releases revealed that wage growth has slowed but unemployment is at its lowest since 1975.
