london-souvenirs-871280326079mommFinancial markets are almost exclusively focused on tomorrow’s Fed meeting. Undoubtedly, the decision and the accompanying message from the US central bank will have a great importance for closing of the year in the currency market. In the background, however, all the time there is a debate about how will look UK exit from the EU and the discussion has also considerable influence on the quotation of pound.

In the June referendum, the British decided to withdraw from the European Union, but so far it is not known exactly how the process should look like. Should formally launch the so-called. Article 50 of the Treaty of Lisbon and then parties would have two years to the negotiation process. British procrastinate starting the procedure trying to adequately prepare for this process. Initially, the government of Theresa May tactic was waving sabers, claiming that it is ready for the so-called Hard Brexit, which means fast leaving the EU regardless of the economic consequences.

The EU not softened the atmosphere threatening to cut off the UK from common market. Now it turns out, however, that the British can clearly relax. Such a signal was sent at least yesterday by Philip Hammond, Chancellor of the Exchequer in the current government. In his opinion, two years is far too little to develop a relevant agreement, and too fast closing of negotiations could prove too expensive for the British economy. As an example he points the need for analysis of the impact on the various sectors of the economy would have introduced different rates of custom duty. He points out that for both parties would be better to work out interim agreement to be in force until  development of all the necessary details.

For the market, the change in tactics is important. It is worth noting that the pound lost heavily in September and October, despite very good macroeconomic data, showing the economy’s resilience to the increased uncertainty associated with Brexit. Investors feared, however, that the submission of a quick exit from Union over economic issues would be fatal for the British economy and the pound become cheaper. Now, if the parties actually sought to the Interim Agreement, the actual Brexit could drift away number of years. And this would mean that price of pound could get too far. The result is that the pound against the Polish Zloty is most expensive since the first half of July. At 11:00 dollar costs 4.1914 PLN, euro 4.4496 PLN  franc 4.1345, while the pound 5.3168 PLN.

dr Przemyslaw Kwiecien

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