Brexit transition deal in focus at the March EU leaders summit - ING

Viraj Patel, Foreign Exchange Strategist at ING, suggests that the immediate focus for investors at the upcoming 22-23 March EU leaders summit is whether both sides can formally agree on a Brexit transition deal - which, if successfully achieved, would go some way to reducing the long-run risks surrounding the UK economy.

Key Quotes

“While it appears the UK government have conceded to the transition period ending in December 2020 - and potentially EU citizens' rights - the major sticking point remains over the Irish border.”

“In principle, if a deal can be finalised this week, we would expect GBP to see a sharp knee-jerk move higher - noting that this would be a positive surprise given that investors have downgraded their expectations for a transition being agreed as early as this week's summit (and even this month), while more neutral GBP positioning and a small Brexit risk premium in the currency (our model estimates suggest GBP/USD should be trading in region of 1.39-1.41) also lends support to a move higher.”