Via Bloomberg
Even if Boris Johnson's Withdrawal Bill eventually gets through the House of Commons vote there are still tough times ahead for the pound due to the next deadline that will loom. That deadline is the transition period which is due to end in 14 months time
What is the transition period? (taken from the UK's fact finding charity , full fact)
Under the terms of the Withdrawal Agreement agreed by the government and the EU in October 2019, the UK will enter a transition period when it leaves the EU. This was the same in the Withdrawal Agreement negotiated by Theresa May's government which was voted down by parliament three times.
The purpose of the transition period is to provide time for the UK and the EU to negotiate on what their future relationship will look like.
During the transition period the UK won't be a member of the EU but will still have to abide by its rules. For example, the UK would still have to contribute to the EU budget until 2020 along with paying for any other financial commitments made as an EU member. The latest estimates put the total 'divorce bill' at £33 billion. If the transition period is extended then extra payments may need to be made and these would be decided on by a joint UK-EU committee.
As with the agreement Theresa May's government put forward, the end date for the transition period is set at the 31 December 2020. It is possible the transition period could be extended for one or two years-provided that is settled before 1 July 2020.
So, the point of the above means that Boris Johnson's agreement would avoid a no-deal Brexit at the end of this month, but it will not finalise the issue of what Britain's future trade relationship with the EU will be. So, if no free trade deal was arranged by Dec 2020 that would mean new tariffs on EU-UK trade in accordance with the World Trade Organisation.
The UK has until July 1 to ask for a transition period extension , which would give the UK another 2 years. Another 2 years of uncertainty and fog, which has been weighing on the pound for the last three years. So, the withdrawal agreement will not end the uncertainty for the GBP and traders focus will quickly shift onto the transition period to see what the UK's trade relationship with the EU will actually turn out to be once/if the deal finally gets through. See here for Justin's post on this yesterday.
