There are bubbling expectations that the UK might look to run trade talks with the US in parallel with its negotiations with the EU.
The UK PM’s spokesperson spoke during a briefing at Westminster this week. He told reporters that the UK would be “free to hold trade discussions with other countries across the world” following the January 31st departure date.
Johnson’s spokesman said:
“Once we have left the EU on January 31 we will be free to hold trade discussions with countries across the world and not just focus on discussing the future partnership with the EU.”
MP’s Split Over Handling Trade Talks
These comments follow reports over the weekend from UK newspapers revealing that the PM’s cabinet is divided over how best to approach the trade deal negotiations with the EU.
The report by the Sunday Times highlighted that some top ministers, such as Dominic Raab and Liz Truss, are in favor of running parallel talks with the US in order to exert pressure on the EU.
However, according to the report, other cabinet ministers deem this approach “unrealistic”.
MPs Debate Brexit Bill
UK MPs have returned from their Christmas break. They are now taking part in three days of debate on the PM’s Withdrawal Agreement Bill, before a final vote on Thursday.
Expectations are for the bill which was passed in its initial stage before Christmas, to be confirmed this week. This is primarily due to the strong majority held by the Conservative party in parliament.
Confirmation of the bill will see the UK leave the EU on January 31st. This will activate the transition phase, currently due to end on December 31st, 2020.
Deadline In Question
There is still a great deal of controversy around the current deadline for the transition phase.
Many critics argue that 11 months is nowhere near enough time to establish a proper trade deal. Many have even accused Boris of setting the talks up for failure.
Despite the criticism, Johnson remains adamant that the two sides can hammer out a deal within the current timeframe. However, he has warned that he will not extend the deadline if a deal is not ready. He is adamant that he remains prepared to leave the EU without a trade deal if necessary.
The issue of the deadline raises risks for GBP into the back end of the year. However, for now, it seems that traders are reveling in the calmer conditions. A no-deal Brexit is now out of the picture.
GBP has been well supported over recent weeks and looks likely to continue higher in the near term.
GBPUSD continues to fluctuate around the 1.3057 level. The initial breakout last month, was capped by the long-term bearish trend line from 2015 highs. That being said, the retest of the shorter-term bearish trend line has held as support.
While price holds above the 1.3057 support, focus remains on further upside with the 1.3375 level the key topside level to watch. To the downside, the 1.2768 level is the main structural support with the bullish trend line from 2019 lows coming in around the same level.