One of the most momentous political events of this decade, Britain’s departure from the European Union will have a lasting impact on financial markets worldwide — particularly in the Forex. As ongoing Brexit talks continue and the May 29th, 2019 exit deadline looms ever closer, what should traders be keeping an eye out for with Brexit negotiations coming up in the fourth quarter?
Brexit negotiations and impact on Forex traders
2018 is the year that negotiations for Britain’s future with the European Union should be settled. With governments pushing to come to a deal by November in order to meet the March 29, 2019 deadline, recent talks for Brexit and Ireland have nearly come to a head. Recent talks indicate both sides are ready for a compromise, and looking to find common group to allow for a smooth exit.
Inflation and interest rates could both be largely affected by these decisions.
U.K. Prime Minister Theresa May has been preparing a new proposal to the European Union involving Ireland border policies. If successful, this deal would allow the border between the British mainland and Northern Ireland to remain open and free for travel or trade following Brexit.
May has been fighting to find a way to avoid police and customs checks on the border between the U.K. and Ireland.
According to a recent Bloomberg report, an senior government official believes the British side now sees a path to reach an agreement. However, other sources indicate agreements have slowed down, leading to continued volatility in the pound sterling against the dollar.
The Brexit vote was a massive surprise to traders, and the influence on the foreign currency investment will not be easily forgotten.
This market movement caused rolling volatility throughout the Forex market, and while some investors prepared for this major movement by positioning, many traders faced wiped out accounts thanks to dramatic dips in the GBP. As talks continue, traders are unlikely to be caught by surprise again.
Market performance will depend largely on deals decided regarding import tariffs and regulations.
There are a lot of potential outcomes for these complex political agreements, but one thing is for certain; Forex traders worldwide will be awaiting a final decision with baited breath.