The British pound is trading in a narrow price range after the news on Brexit, which lead investors and traders to a greater impasse.
Today, the Minister of Commerce Wilbur Ross urged the EU to begin an accelerated process of negotiations on a trade agreement with the United States, saying at a press conference in Brussels that the patience of the President of the United States has almost run out. This suggests that the White House remembered about the EU and trade duties, and just at the wrong time. I don't think it's a coincidence.
Brexit and the pressure from the White House
After the appearance of such news, representatives of the European Union made a proposal to extend the transition period for Brexit for another 12 months, arguing that there is very little time left, and the problematic issues have not yet been resolved. Let me remind you that the UK's exit from the EU is scheduled for March 2019.
Donald Trump demanded faster results in trade negotiations with the EU, progress in which, in his opinion, is still unsatisfactory. European Commissioner Cecilia Malmstrom, in turn, accused Washington of not working with the EU on forming a structure of the trade agreement.
In other words, the trade conflict with China, which lasted for quite a long time and which will be discussed for more than a year, gradually moved to the background. It's time for the US presidential administration to return the pressure on the EU, which is puzzled by the problem with Brexit and is in the most vulnerable position.
Most likely, the strategy of the summer break was made precisely because of the timing, which allowed the EU to deal with two problems at the same time. Now, when an agreement on Brexit has not been reached, and is unlikely to be, it's time for the White House to remind the EU about itself.
As I noted above, now, in order to break the deadlock in the Brexit negotiations, the EU is ready to extend the transition period for the UK for one year.
But this course of things is unlikely to suit the supporters of the hard Brexit, as the extension of the terms keeps the UK trade membership for another year and forces them to obey the EU rules. British Prime Minister Theresa May also made a statement in this regard, which is considering a longer transition period.
The British pound, meanwhile, does not know how to react to all this. A slight strengthening in the first half of the day was replaced by a fall after the release of data that retail sales in the UK decreased compared to August this year. The fall was due to the fact that consumers reduced costs after the summer.
According to a report by the National Bureau of Statistics, retail sales declined by 0.8% in September 2018. Let me remind you that consumer spending is one of the drivers of economic growth.
As noted in the Bureau, at present, the prospects for consumer spending are ambiguous, even if wage growth accelerates and inflation slows down. All this is offset by consumer confidence, which is declining against the background of Brexit uncertainty.
The material has been provided by InstaForex Company - www.instaforex.com