Economists express confidence in a likely free trade deal between the UK and EU

on Dec 5, 2019
Updated: Mar 11, 2020
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  • Nearly all 35 economists expressed confidence in the UK leaving the EU with a deal.
  • GBP/USD is likely to print remarkable gains in 2020, as per the experts.
  • Prime Minister Boris Johnson is set to win a majority in the UK's upcoming general election.
  • Cable broke above the 1.31 resistance to note 1.3140 that marks the highest since March 2019.

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Monthly polling on Brexit has been going on for more than two years. As per the latest poll, the probability of the United Kingdom’s (UK) disorderly departure from the European Union (EU) has been reported at a record low. To add to the good news, Economists poll also highlighted that the UK and the European Union are likely to agree to free trade post-Brexit.

Cable Is Likely To Print Remarkable Gains Next Year

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The recent Reuters poll covered almost all of the foreign exchange strategists. As per the poll, the strategists expressed confidence that the UK will depart the EU with a deal. In the upcoming year, the strategists added, Sterling can be expected to print remarkable gains.

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The UK’s upcoming general election on December 12th is set to see Prime Minister Boris Johnson winning a majority. The PM had called the general election in October in order to break the Parliament’s deadlock. Upon victory, Johnson will get the lawmaker’s approval for his withdrawal agreement that will finally put an end to Brexit and ensure the United Kingdom’s departure from the EU on January 31st.

The median probability of the UK’s exit without a deal with the EU was reported at 20% in October, as per the Reuters poll. As of November 29th to December 4th poll, however, the probability has dropped sharply by 15%.

Probability Of A No-Deal Brexit Remained On Second Spot

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The probability of a no-deal Brexit, on the other hand, had taken the third spot in October’s poll. As of November, however, it was upgraded to the second spot, as per the Reuters poll. In an event of a no-deal, the two parties will trade as per the rules set by the World Trade Organization. Responding to an additional question, however, all 35 economists expressed confidence in the prospect of a trade deal between the UK and the EU.

The option of the United Kingdom to stay a part of the European Economic Area, took the third spot, as per the latest poll. In such an event, while Britain won’t have a say in economic policies, the Single Market will remain in access of the UK as long as it pays into the European Union’s budget.

Following the economists poll, the celebration in “Cable” in the forex market is evident. GBP/USD has already broken above two crucial resistances located at 1.3000 and 1.3100. Breaking above the psychological resistance at 1.3100 later on Wednesday, the pair was last seen trading at 1.3140 that marks the highest since March 2019.

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