MUFG's assessment of the chances for a Brexit trade deal between the UK and EU, this from a note (in brief):
Both sides now say the chances of a deal being reached by the end of August are fading fast
All hope is not lost though as both sides continue to acknowledge that an agreement could be ready within weeks if they can bridge their differences in three key areas of disagreement:
- i) EU access to British fishing waters,
- ii) how closely the UK will stay aligned to EU rules on state aid,
- and iii) what role the European Court of Justice will play in policing the pact.
MUFG add on GBP:
- In recent months, Brexit developments have had little impact on the pound
- we believe that the outlook for the pound continues to worsen
- recommended a long EUR/GBP trade idea
- Incoherent government policy on COVID, the 2nd worst COVID death rate by population in the world, high frequency data that indicates a more subdued recovery, a budget deficit profile that is worse than most other major economies and rising Brexit uncertainties all point to the pound being singled out as higher risk than most other G10 currencies
----
Some notes on the above:
- there are EU/UK trade talks this week
- final negotiating round is scheduled for the week of 17th August
- EU has a final deadline to reach a deal by October
