GBP/CAD is sticking to a bearish mood on Tuesday, amid fresh Brexit concerns. Currently, the pair is trading at 1.7179, down 0.24% as of 9:50 AM UTC.
The sterling started to decline after European officials hinted that the current timeline for the Brexit transition period is too tight in order to achieve a decent trade deal. Last month, after winning the UK election by a margin, Prime Minister Boris Johnson ruled out any attempt to extend the transition deadline beyond December 2020. In this situation, the two sides have only 11 months after the official Brexit date to reach consensus on the trade relationship.
Earlier today, French minister Amelie de Montchalin said that the UK’s scale of trade ties with the European Union (EU) depends on its alignment with the bloc’s standards and rules. She said during a meeting with EU ministers in Brussels:
“The more access to our internal market the UK wants, the more we have to converge on rules and norms. If there is no clear guarantees for citizens and companies, if there is no level playing field guarantees of loyal competition, the commercial openness of the EU will not be total.”
“The degree of our economic openness will depend on the degree of convergence we will have,” she added.
The minister said that it was impossible to “conceive a completely new commercial system” in 11 months.
Yesterday, EU’s chief Brexit negotiator Michel Barnier said that the UK would likely require a longer period than eleven months to strike the trade deal. While Johnson is confident that the deadline will be met, Barnier said that it was unlikely.
The divergence between Johnson and European leaders might lead to a no-deal Brexit in the case when the two sides don’t reach an agreement by December 2020. Investors are concerned that such a scenario will hurt the British economy the most, which is the reason why the sterling is under increased pressure right now.
The Loonie is itself in trouble these days amid decreasing oil prices. Crude fell to three-month lows on fears of the coronavirus outbreak in China.
