This Week Highlight - The Post-BREXIT Deal


Just before Christmas, U.K. announced the good news of reaching a deal with the EU officials. This deal is unexpected and comes as a surprise gift to many traders who have been waiting to punt the Pound.

The deal is agreed between the U.K. and the EU officials for a potential "zero tariff - zero quota" policy to be further ratified after the year-end. At least, the agreement in principle has been fixed in place while just waiting for the parliament to draw down the rules in January.

IN the past, we have seen the final week of December to be illiquid in market. Even though there is any unexpected fundamental news, the market is still irresponsive until January. Hence, we foresee not much market movement in Pound until the GBP/USD might pierce above 1.3600 in January and hikes for 1.3800 level!

Ironically, the coronavirus crisis has damaged and also helped the U.K. in getting the post-BREXIT deal. Currently, the covid-19 has mutated and resurged into a new second wave impact throughout Britain and North Ireland. Strenuous and wider lockdown has been imposed in December month to mitigate the spread of this crisis.

Domestically, the British economy has shrunk from the coronavirus impact greatly dented the supply chain within the country. Externally, Britain is still one the largest economy among the European countries and command an important role in the consumer markets.

After the lockdown and impact of the covid-19 crisis, EU has realized the huge cut down in demand and deviation of consumer demand from the emerging markets among Eastern Europe. Hence, it may be unwise if the dispute of post-BREXIT continues and put Britain down in a disadvantageous situation. The key survival is to strike a win-win situation and mutual beneficial policies for the two jurisdictions.

Therefore, the nightmare for U.K. Parliament leaders will be alleviated once the "zero tariff- zero quota" policy implements in 2021. Hold your horses in British assets and observe further before you make final decision.

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Disclaimer: The contents are not meant to solicit or imply to any investment. You should seek the advice of a professional consultant before making such decision.


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