The European Union’s chief Brexit negotiator said on Friday that no significant progress was made in this week’s round of talks aimed at shaping future relations between the bloc and the UK.
Brussels-London conflict
“Those who were hoping for negotiations to move swiftly forward this week will have bee disappointed And unfortunately I too am frankly disappointed and concerned and surprised as well,” Barnier told a news conference after two full days of talks in Brussels.
“The British negotiators have not shown any real willingness to move forward on issues of fundamental importance for the European Union and this despite the flexibility which we have shown over recent months.”
On the other hand, the British side blamed the Europeans for the failure of the negotiations.
“I am very worried about the situation in the negotiations,” said British chief negotiator David Frost. An agreement is still possible but seems unlikely,” he added.
Another senior British negotiating official pointed to the EU’s insistence that state aid and fisheries policy must be adopted in order for negotiations to continue. “We are ready to talk about anything,” the official said. We are not slowing down the process.”
The pound fell to 1.3126 against the US dollar (GBPUSD) after this week’s failed British-European trade talks. Euro increased from 0.8944 to 0.8979 against the pound (EURGBP).
Iran sanctions dispute
The US took action Thursday to restore UN sanctions, including an arms embargo on Iran.
US Secretary of State Mike Pompeo argued that Iran violated the Obama-era agreement, although Washington itself, under Trump, abandoned the 2015 nuclear deal with world powers in Tehran two years ago.
The United States submitted a letter to the 15-member UN Security Council accusing Tehran of non-compliance and initiated a 30-day process to re-enforce the snapback sanctions.
However, all the remaining parties to the nuclear deal — Germany, France, the United, Russia, and China — immediately informed the Security Council that they did not recognize the US move.
The Security Council also overwhelmingly rejected the US proposal to extend the UN arms embargo on Iran, set to expire in October.
Kelly Craft, the US Ambassador to the United Nations, told the German newspaper Sueddeutsche Zeitung that Washington was “disappointed” with the behavior of its European allies.
The trend of correction following the excessive rise in precious metals led by gold sensitive to geopolitical developments regarding Iran, the USA, and China continued. An ounce of gold (XAUUSD) declined to $1917.
British data
Data released on Friday showed the UK’s economic recovery was gaining momentum from the shock of the COVID-19 pandemic, but not enough to address concerns due to government borrowing exceeding £2 trillion and future job losses.
According to the figures published by the National Statistics Office, retail sales in July were 1.4% compared to the previous year, and it was 3.0% above the level before the epidemic.
The British Industrial Confederation’s monthly order book balance increased from -46 in July to -44 in August. A Reuters poll of economists pointed to a larger increase of -35.
In the Kingdom, the Composite PMI surpassed the 57.1 forecasts at 60.3 and the previous 57.01, while the Manufacturing Purchasing Managers’ Index (PMI) with the 55.3 forecasts came at 53.8 and exceeded the previous figure of 53.3. Services PMI recovery continued at 60.1 versus 57.0 forecasts and 56.5 previous data.
The British economy is still facing a long recovery after a record 20% contraction in the second quarter.
US markets
US government debt prices plummeted on Friday morning as US investors closely followed the snapshots of index data from purchasing managers for more clues about the pace of the economic recovery.
At 2:15 AM ET, the benchmark 10-year Treasury bill yield rose 0.6525%, while the 30-year Treasury bond yield rose 1.3871%. Returns move in inversely to prices.
Americans’ unemployment claims on Thursday heightened fears of a slow recovery from the coronavirus-driven crisis. The Labor Department showed that the number of Americans applying for unemployment benefits for the first time rose to over 1 million again last week.
The data diverted some market participants to safe-haven assets such as US debt in previous sessions. The conflict in Washington between Republicans and Democrats over a new economic aid package has increased the pressure.
On the data front, the flash reading of the August manufacturing PMI and the August service PMI will be released soon. Current home sales data for July will come in shortly.
