15.06.2020 Eur/Gbp Daily Analysis

15.06.2020 Eur/Gbp Daily Analysis

Eur/Gbp today is trading at 0.8979, it is trading higher with 0.03% mainly because the UK has experienced a disproportionately heavy toll from the pandemic due in significant part to government mismanagement in the crisis, accounting for near 10% of global Covid-19 confirmed fatalities (according to Johns Hopkins University data) with 0.9% of the world’s population. The UK faces a second potential crisis: the looming end-June deadline in the Brexit process on whether to extend the standstill implementation period in the EU’s single market and customs union beyond 2020 – a deadline that the UK negotiators are likely to let pass by. According to Shen “If so, the UK would technically lose its option under the 2019 Withdrawal Agreement to avoid a disruptive no-deal exit on 1 January 2021,” “However, even if the deadline is ignored, we expect an agreement late in 2020 to extend the transition state and avoid hard Brexit. Such an extension would mean that the UK continues payments to the EU budget for the EU’s 2021-27 financial period.”  UK proposals for a temporary light-touch customs regime, in the case no trade deal is struck, are also unrealistic – as stated by the EU and this is making the pound to be weaker against the euro. At the moment Prime Minister Boris Johnson’s government faces a delicate balancing act of gradually re-opening the economy and easing physical distancing while avoiding a significant second wave of infection, as is the case for many other governments around the world.