Nowadays, there have been some currencies and commodities in the global market that have improved. An example is Dollar. On the other hand, golds are in decline due to some conditions. One of them is the stimulus in the middle of the coronavirus that is uncertain.

The Pound is also strengthening. Uniquely, it precisely happens in the midst of talks on Brexit. According to the data, the Pound gained more than 0.5% and traded above $1.28 on Monday. There are strong reasons why this situation can occur in the market.

The reason for that is the latest round of trade deal negotiations between the UK and the EU that will begin tomorrow. The chief negotiator at the meeting is Michael Barnier and meeting with David Frost on Friday. No one knows for sure what the results will be.

High Pressure for Both Parties

Both sides in the meeting are reportedly under intense pressure to prepare for a deal. Why? It is because British businesses are struggling to prepare for trade restrictions due to the coronavirus pandemic that is still occurring in the country and various places around the world.

In addition, investors believe that more stimulus measures are in the future. It was done to help the economy as possible and will probably be announced as soon as Finance Minister Rishi Sunak announces the government's plans.  It is to protect the jobs over the next six months.

It said the announcement would be made on Thursday and it will be awaited by the investors. However, the threat of new lockdown measures could be done again. In addition, it is likely that negative interest rates will continue to weigh on some currencies.

GBPUSD moved up to $1.28417 away from a two-month low last week. Nevertheless, the pair is still moving consolidated as the dollar temporarily softens. In addition, traders and investors in the market are also waiting for the certainty of a deal on Brexit.

Why does Brexit have Such a Big Influence?

Brexit is arguably one of the new terms in the world of global trade. The word stands for 'Britain Exit' which the UK withdraws from the European Union. Why would the UK ultimately leave the EU? It is because of the referendum policy they have.

So, citizens who already have enough age are allowed to vote. The vote took place in 2016. In the referendum, there are two options given namely "remain" or "leave". As a result, 51.6% of people voted to leave. While the rest voted to remain. 

Before actually leaving, politicians want a deal first with the E.U. This step is important to ensure a smooth transition process for businesses and citizens. In addition, the movie is also intended to give time for the discussion of a permanent trade relationship.

What Would the Impact Be if a Brexit Happened Without a Deal?

If a deal is not reached, then the UK will immediately cut all ties with the EU, with no transition period, and with no guarantee of citizens' right of residence. The government is worried that this situation will cause major disruption to the business world.

The example is a long queue of containers at the border because it has to pass cargo inspections. The UK couldn’t be able to supply fresh food and medicines if shipments from the EU are interrupted. The long-term impact on the UK economy could also be negative. 

However, MPs said the situation would not be that bad as the UK could get a £39 debt repayment fund from the EU. After that, it is free and easy to establish a favorable trading relationship with any country in the world.