The increasing severity of the ongoing coronavirus outbreak has raised serious questions over the validity of the PM’s refusal to extend the transition beyond December 31st.
The PM has so far been adamant that the current trade talks between the UK and the EU will not be extended. And, if a deal is not in place in time, the UK is prepared to walk away without one.
Johnson Warns Over Trade Talks Progress
Last month, the UK government published its guidelines for trade talks.
It warned the EU that if a robust outline for a deal is not outlined by June, ready to be confirmed by September, the UK is prepared to walk away from the talks ahead of the December 31st deadline.
However, both UK and EU leaders are totally engaged in fighting the coronavirus outbreak. As a result, trade talks have had to be put on pause for now. With health authorities warning that the virus could continue to spread for months to come, the PM’s June deadline now looks inappropriate.
PM Sticking to Deadline Pledge
Commenting on the situation at the end of last week, the PM’s spokesman once again confirmed that the PM will press ahead with the December 31st deadline saying:
“In UK law, a request for an extension is not possible”.
Commenting on how the virus is affecting the ongoing trade talks, the PM’s spokesman said:
“It will be possible to do the trade talks. Both the UK and the EU are fully aware of the timetable which we’re working towards… The discussions can take place using an alternative forum, such as video-conferencing… Video-conferencing is something which is used throughout the world, and business.”
GBP Under Pressure
GBP has been under heavy selling pressure over the last week following a surprise rate cut from the BOE. Following in the footsteps of the Fed, the BOE announced a 0.5% rate cut. This took rates down to record lows of 0.25%.
The BOE cited its concern over the economic impact of the virus outbreak as its reason for cutting and signaled that it could take further action if necessary.
Looking at GBPUSD on the monthly timeframe shows that price has been moving in a clear descending triangle pattern against the 1.1929 support level.
While the bearish trend line remains intact, a further test of this level looks highly likely, a break of which would be a long term bearish signal for GBPUSD.