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02 Dec 2020
3 min read

Brexit Hanging by a Thread, UK Authorizes Vaccination

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Written by OspreyFX News Team

Brexit Hanging by a Thread, UK Authorizes Vaccination

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Key Takeaway

  • Brexit agreements still pending
  • The UK becomes the first country to approve a Covid-19 vaccine

The Brexit question remains unresolved as the transition period is currently in its final days and tensions are building up. There are several important agreements that the European Union and the United Kingdom need to reach before the Brexit transition period ends on December 31. There are also many small but important agreements that the EU is refusing to budge on. The EU is still unwilling to grant Britain rights and allowances in many sectors, which could lead to more complications as time progresses.

Brussels has yet to speak about lingering topics that include financial service regulations, medical devices and the recognition of product testing regimes and even pet passports, as the UK has applied to become a “part 1 listed” country so that it can benefit from the EU scheme that allows the cross border movement of certain pets without quarantine. As the end of the transition period approaches, the two sides need to move quickly, otherwise, in four weeks the UK will leave the EU without a deal and many of these small but important details will add up.

Key Differences in Negotiation

As of today, three key differences persist in the negotiation process. Fisheries, governance, and a level playing field remain the main red lines that prevent the two sides from reaching an agreement. Not much progress has been made since the start of the week as market participants begin to doubt if a deal will be reached. As reported earlier today, chief EU negotiator Michel Barnier told EU envoys that there may not be a Brexit deal, which immediately sent the Sterling lower.

The GBP/SUD pair was trading close to a 3-month high at its peak over 1.3440 just before the news breakout. The pair depreciated to a low of 1.3303 and is currently trading at 1.3312. The main trend on the short-term remains bullish, but as the Brexit deadline approaches, the pair may be subjected to high volatility and wild swings in both directions. Other currency pairs that include the British pound as the base currency were also affected and registered a quick and relatively considerable drop.

 

A Crucial 36-Hour Period for Brexit as the UK Authorizes Vaccine

Before the news, Mr. Barnier told ambassadors that the next 36 hours leading up to Thursday evening will prove to be crucial for the development of the Brexit process. Pressure has been built in the EU camp as the deadline draws closer. Reportedly, France and other EU members have become impatient to get a deal and have instructed EU’s Barnier “to include them before agreeing to anything”.

In other news, the UK has become the first country to approve a Covid-19 vaccine as it prepares to make the Pfizer-BioNTech shot available from next week. The vaccine was authorized for use in the UK earlier today as the priority list for vaccination will be released later today, according to health secretary Matt Hancock. The UK has signed a contract for 40 million doses of the Pfizer-BioNTech vaccine. Starting next week, at most 20 million people will be vaccinated, as it is a two-shot vaccine.