GBP/CAD is in free fall on Wednesday, after gaining 0.51% yesterday. Currently, one British pound buys 1.7189 Canadian dollars, down 0.44%.
EU Says Britain Ignores Irish Border Promises
On Tuesday, the sterling extended its rally after European ministers met in Brussels to approve their mandate for the trade talks with the UK after the latter left the bloc on January 31. As the meeting went on, investors had some hopes that the post-Brexit uncertainty would fade. However, as we anticipated, the bullish trend didn’t last for long because tensions started to show up.
The EU said that the trade talks with Britain would start next Monday, but warned that the process would be tough and might even fail if Johnson doesn’t secure the Irish border as pledged in the Withdrawal Agreement Bill (WAB).
The Irish border has been one of the most sensitive topics since the referendum took place in 2016. The UK said that it would implement checks on goods coming into © from mainland Britain. However, it doesn’t seem to keep its promise, and European leaders cannot ignore this.
Irish Foreign Minister Simon Coveney said that London would probably fail to secure a trade deal with the bloc by the end of this year if it doesn’t honour the border obligations. He said:
“If there isn’t progress on the infrastructure needed… in the next few months, that’s going to be a very worrying signal for whether or not it’s going to be possible to conclude something sensible before the end of the year. If that doesn’t happen, it will damage significantly the prospects of being able to get even a bare-bones trade agreement… by the end of the year.”
European Brexit negotiator Michel Barnier supported Coveney’s comments, anticipating a very hard process of negotiations.
“The UK cannot have quality access to the (EU) single market if it is not prepared to accept guarantees that competition remains open, free and fair,” the official said.
The UK is set to release its own negotiating stance for the trade talks tomorrow.
The increasing divergences didn’t allow the pound to resist against the Loonie, which is itself under pressure amid declining oil prices and coronavirus effect.
