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What changed in the UK-EU relations? Everything and nothing.

2020-10-23

2020-10-23

Pound will have a new collar. Review as of 23.10.2020Dmitri Demidenko

What changed in the UK-EU relations? Everything and nothing.

You need to pet a dog until a collar is ready

I’d say the most interesting and mysterious event of October’s last week is the pound’s impressive upsurge.  Less time is left before the transition period ends, there isn’t any breakthrough in the UK-EU relations, and [GBPUSD][1] quotes have soared above the bottom of figure 31. Is there anything we don’t know about the pound? What could possibly change after 5-day talks? Everything and nothing.

The union of the EU and Great Britain could be called perfect. She married him out of pity and he married her out of compassion. Now they are divorcing for the same reasons. All understand well the consequences of a no-deal Brexit during the pandemic. Both David Frost and Michel Barnier want that deal, but they need their bosses’ support to reach it. They both were sure they had it on 21 October. The pound grew rapidly in response to that.

The parties chose different ways to reach a compromise. Brussels tolerates Johnson’s every freak: they know you need to pet a dog until a collar is ready. London has to behave inadequately to gain local eurosceptics’ favour.

- A girl only needs to put on a red dress to draw attention!

- Well, a boy also only needs to put on a red dress to draw attention!

The British PM is choosing weird clothes, indeed: he used an Internal Market Bill to violate the international law or said Michel Barnier should not come to the UK unless he had some constructive suggestions. The EU thinks he is just showing off, and the markets don’t believe his single word: his theatrical performance reminds of last year’s one when he used threats for extending the transition period. At the same time, the British citizens are mentioning Incas and Aztecs more and more often. Those tribes sacrificed their leaders during pandemics. I’m not suggesting anything…but that was a beautiful custom.

- Don’t be afraid! I’m with you!

- And that frightens me.

At first glance, nothing changed in the week of the EU and Britain’s talks. But in fact, everything changed. The EU is ready to draw back from its principle of parallelism – a ban on certain topics until Britain makes compromises in other areas. The denouement is near. The issue of state subsidies and fishing doesn’t seem an insuperable obstacle any longer. That’s the key difference from what was up at the beginning of October:

- Brussels, may I decide myself whether or nor I should report on business subsidies?

- London, I’m going to explain everything in simple terms. Do you see my middle finger?

Britain has got loads of problems, but there’s light at the end of the tunnel too. Now it can make trading deals with other countries and openly express its love for those it really loves. Japan, for example.

- I’ve been married for 10 years and loved only her.

- Wow! That’s an exceptional case in marriage.

- I only hope my wife doesn’t find out.

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Price chart of GBPUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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