EU Summit could cause Sterling rally (Daniel Johnson)

Davis comments cause the pound to fall

Sterling value is predominantly being influenced by the situation on Brexit.  Phase two of Brexit negotiations is due to commence shortly if all goes to plan tomorrow and how it progresses will have ramifications for the pound. GBP/EUR hit 1.15 on Friday following the announced agreement on Irish borders. I was of the opinion this could be the start of some more significant gains for the pound, but comments from Donald Tusk caused Sterling to fall in value. Phase two negotiations could prove problematic if Brussels decide to make an example of the UK in order to warn off other regions from leaving the EU. I think this has been witnessed to some extent in phase one, I personally feel it is diabolical it has taken this long to get to this stage.
The UK’s Brexit secretary, David Davis has not helped matters. He stated over the weekend that the guarantees on the Northern Ireland border were not legally binding and caused Sterling to drop in value against the majority of major currencies. Not too clever considering his position and power to influence the exchange. He has however vowed to convert the Brexit deal into legally binding text.
Brussels are clearly not happy with Davis’s comments and it does not bode well for negotiations moving forward.  Davis’s comments could cause amendments to the current deal at the EU summit tomorrow. If everything goes to plan Brexit talks can enter phase two next year which should be beneficial to the pound.
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