- Britain will leave the EU on December 31, leaving only 4 weeks to conclude a brexite trade agreement
Both sides expressed their concern that time is running out
FTSE 100 price rose 1.95% yesterday, almost making up for Monday’s losses
The price of the FTSE 100 is trading around 0.35% higher today, after making solid gains yesterday ahead of the crucial talks between the UK and the European Union on the Brexite Trade Agreement.
Basic analysis: sides running out of time to reach an agreement
Both sides have expressed their concern that they are running out of time for a brexite trade agreement. The UK is due to leave the EU on 31st December and two negotiating teams have only four weeks left to reach an agreement and obtain the approval of two parliaments.
“We are really running out of time now. This is the crucial week – we need to make a breakthrough,” said UK Environment Minister George Eustice.
Similar concerns were expressed by EU officials.
“We are running out of time here. The truth about brexite is now being uncovered in the light of the challenges it presents,” said Simon Coveney, Irish Brexite Chief and Foreign Secretary.
In the event that two sides cannot agree on trade agreements, analysts believe this scenario will result in higher costs and obstacles for exporters on both sides. At this stage, two sides are far apart in the areas of state aid, fishing rights and how to resolve future disputes.
“The British need an agreement more than we do. Europeans must have confidence in it and trust their strength in this negotiation,” said France’s Minister for Europe, Clement Beaune.
CNBC previously reported, citing a source close to the EU, that the conclusion of the negotiations between the two sides was based on the telephone conversation between Boris Johnson and his counterpart Ursula von der Leyen.
Technical analysis: FTSE 100 recovers
The FTSE 100 rose 1.95% yesterday, recouping almost all of Monday’s losses due to improving risk sentiment associated with positive vaccine news. However, it is unlikely that we will see much movement in one direction or another before there is more clarity on the Brexite Trade Agreement.
FTSE 100 Daily Chart (TradingView)
The 6500 range remains an important resistance zone for buyers, while 6250 and 6170 offer support if the price action corrects downward as risk sentiment deteriorates.
It appears that time is running out for the European Union and the UK to reach agreement on the Brexite Trade Agreement, while FTSE investors are still positive about the overall outlook.