- Brexit talks latest round was unsuccessful.
- Republican National Convention and Jackson Hole Symposium awaited
The latest EU-UK Brexit negotiations on Friday failed to provide any headway in the thorny issues like fishing rights and enforcing a “level playing field” framework.
European chief negotiator Michel Barnier and counterpart David Frost had said, in a separate statement that a deal looks unlikely at this stage. British Pound might have heightened liquidation pressure after this development; as such a geopolitical conundrum could drag down or even turn upside-down the economic revival in recent months after the coronavirus setbacks.
On Friday, the traders were surprised with a better than expected UK preliminary manufacturing and services PMI data for August. But, a failure in the Brexit talks and a no-deal exit could deliver a hardened blow to the economic numbers in the coming months.
The talk faces difficulty over fishing rights and level playing field framework, as Europe worries whether the British business in these areas could undermine their interests. If these issues are not resolved without much delay, the British Pound will struggle in the coming weeks. The talks’ next round will be on September 7.
Powell Speech at Jackson Hole Symposium Awaited
Fed Chairman Jerome Powell will be addressing the annual Jackson Hole symposium, and the market participants expect clues about any upcoming policy changes in his speech.
Fed has toed the line of supporting the US financial stability and economic revival by using tools that expand their balance sheet and asset holdings within their mandate’s purview.
If the chairman hints at policy continuation, the dollar sell-off might prolong as the risk-on approach will be validated. Fed’s comments on risks to financial stability and the precarious and uncertain nature of an economic recovery haven’t affected the recent trading in the markets.
Also, there is a high possibility that Powell might want the market to wait for the FOMC rate decision on September 16 for further clarity.
