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Britain and EU lay out conflicting views on trade negotiations

Written by Business World, on 18th Feb 2020. Posted in EU

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Sterling edged lower against the dollar on Tuesday as conflicting views from Britain and the European Union on how to proceed with trade negotiations weighed on the currency, although strong jobs data limited losses.

Prime Minister Boris Johnson's Europe adviser, David Frost, said on Monday Britain would not be threatened into following EU rules to win a free-trade agreement with the bloc.

Frost's comments came in contrast with those of EU Commission President Usula von der Leyen, who has called on Britain to guarantee fair competition based on ambitious environmental and labor standards.

Last week, the pound enjoyed its best week in two months after Rishi Sunak was appointed Britain's finance minister. Incumbent Sajid Javid unexpectedly quit in a cabinet reshuffle.

Analysts put the gains in the British currency down to a view that Sunak would be more willing to support an increase in government spending and investment compared with Javid. On Tuesday, Sunak confirmed the budget would be delivered on March 11, as planned.

By 1000 GMT, the pound was 0.1% lower at $1.2995. It was 0.1% lower to the euro, at 83.34 pence.

"I think there's going to be continued optimism on the pound after last week's Cabinet reshuffle," said David Madden, markets analyst at CMC Markets in London.

"But I think there's a continued reluctance to be excessively bullish...all you need is a negative comment from an EU official to see a decent pop lower in and for that reason speculators are a bit scared."

Madden added that the British economy has shown signs of strength in recent weeks.

Data on Tuesday showed the number of people in work in Britain jumped again in the last three months of 2019, which underscored how the labor market defied a slowing of the broader economy ahead of December's election.

Signs of weakness in Britain's labor market in the autumn prompted two Bank of England interest-rate setters to vote for a cut to borrowing costs.

But the BoE's other seven rate-setters have kept borrowing costs on hold amid signs that the economy has gained some momentum in early 2020 following Johnson's election victory on Dec. 12. (Reuters)

Source: www.businessworld.ie

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