â€śWe are a long way apartâ€ť, says Prime Minister Boris Johnson. As the Brexit deadline draws closer and leaders negotiate, GBP/USD remains under pressure.
There is going to be a change on 1 January, and people have to be ready for the change, whatever happens, says Johnson.
GBP/USD Under Pressure as EU and UK Heads Meet
PM Johnson and EU Commission von der Leyen will meet at the Berlaymont headquarters to set right the differences. The GBP/USD currency pair remains under pressure, waiting for the outcome.
The leaders are meeting again, and a decision to make or break the deal will be decided. We have to be optimistic and do our level best, says the UK PM. It would be a make-or-break meeting between the two leaders.
The two leaders UK PM Boris Johnson and the European Commission President Ursula von der Leyen had earlier met over the weekend but the trade deal remained stuck on the same three critical issues. In a joint statement, both leaders said further talks were needed to break the deadlock.
The prime minister says he is willing to leave without a deal. We will prosper well under any version, he says. â€śEven if there is an Australian solution, we are fine with itâ€ť, says Johnson.
Key Contentious Issues that Prevent a Brexit Deal
Brexit is the British exit from the European Union. As per the public vote held in June 2016, the UK will withdraw from the European Union. Both regions have until 31 December to agree upon a trade deal and resolve key issues.
Some key issues under contention are access to British fishing waters, issues over the fair competition, and how the deal will be governed. If these issues are not resolved, the relationship between the EU and the UK may remain problematic.
The European Union fears that Britain may cut standards and subsidize its industries, which may ruin business opportunities for them. Fair competition is a wide gap that is hard to bridge say, experts.
Environment Secretary George Eustice says that there is still a great deal to be done. Though negotiators had come close to resolving their issues on the UK fishing waters, it did not materialize. Fishing area issues include government subsidies in future trade.
The fishing sector employs around 8,000 people providing an income of about 400 million euros. Striking a deal is the best choice, as fish is abundant in the rich waters of Britain.
Level playing field measures have to be ensured, and both sides have to agree on standards negotiated.
Ms. von der Leyen will meet the 27 leaders of the European Union at the two-day summit on Thursday. She will brief the leaders on her talks with PM Johnson with them.
The French PM stated that he would veto a bad deal. Germany talks about compromise and red lines if a bad deal is drawn.
Mr. Eustice says that the bloc had revised demands on fishing rights, which had prevented an agreement during the last talks.
EU chief negotiator Michel Barnier says there is a very â€śslim chance of a dealâ€ť.
Meanwhile, the GBP/USD currency pair bounced back to a resistance level at 1.3450 during trade on Wednesday, 9 December. Though Brexit uncertainties grow, the weakening US dollar is keeping the British Pound strong. However, Brexit news will drive the Sterling, once strong news flow in. The British Pound is supported at the 1.3350 levels and further down at 1.3300 levels.
The EUR/USD is moving to supports at 1.2090. If the euro moves below this level against the dollar, it has another support at 1.2010. There is a chance for the EUR/USD currency pair to move upwards from these supports, especially with the weakening dollar.
US Dollar Index
The US Dollar Index was unable to break past 91.00 levels on Tuesday and drifted lower.Â The DXY remains tilted with bearish momentum. The 200 SMA is at 95.77, and the DXY is expected to stay above this support. The US Dollar Index is trailing negatively against a basket of other currencies.
If there is No Deal
If a deal is not reached between the UK and the EU, border checks and taxes have to be drafted and introduced for all goods traded between the two zones.
A no-deal will not be good for EU businesses too, especially the fishing community which has access to the UK waters.
The UK government says, â€śNo deal is better than a bad dealâ€ť.
Some EU countries like France, Belgium, and the Netherlands, say it too. Officials have asked negotiators not to give away â€śtoo muchâ€ť during talks.
Even if a deal is agreed upon between the two sides, there are many obstacles to be faced. The agreement has to be translated into all EU languages and ratified by the European Parliament. The 27 member states have to ratify an agreement after seeing the content of the deal.
Rachel Reeves, Shadow Minister for the Cabinet Office, says that her party has to see the content and then decide upon backing the agreement or rejecting it. The UK government has to overcome home opposition over legislation with previous commitments with the European Union.