- While the pound today was recovering to close the Asian opening gap following negative N.Ireland border/backstop Brexit headlines from Friday and weekend news, GBP/USD has been rejected at the pivot on Monday in European trade and continues to be tugged and pulled by bulls and bears.
- PM May has a testing week ahead, with trying to both sell the Brexit negotiation’s progress at home in Parliament as well as face EU counterparts on Wednesday 17th October that will lead to an EU vote by all 27 EU members the following day.
In other words, it’s crunch time. PM May insists that good progress has been made and that there’s been a great deal of inaccurate speculation about the weekend event whereby an emergency meeting between EU chief negotiator Michel Barnier and Brexit Secretary of State Dominic Raab took place on Sunday and didn’t sound as if things went so well – It was reported that the unscheduled talks ended in failure after they failed to resolve key issues including the Irish border question. Furthermore, May is experiencing the prospects of a Brexit-mutiny at home with former Cabinet minister David Davis calling the Prime Minister’s Chequers plan ‘completely unacceptable’. That coupled with the DUP leader, Arlene Foster, reportedly ‘ready’ to trigger a no-deal Brexit and saying in a leaked email that no-deal is now the most likely outcome after she had her own ‘hostile’ talks with Michel Barnier in Brussels last week is weighing on sentiment as bets increase for a no deal by the 29th March 2019 leave date.
We also have news of that four more letters demanding a vote of no confidence in the PM were submitted last week. There were a total of 44, just four short of the number needed to trigger a vote. The Sunday Times said at least nine ministers want Mrs May to change course when the Cabinet meets on Tuesday while various possible resignations have been speculated as well.
EU to vote – crunch time for Brexit
When the EU vote this week, May will then need to take the plan to her own Parliamentary vote in December and the question then will be whether PM May will able to sell the agreement, if any was actually negotiated, to UK MPs. all in all, Brexit is far from being a bed of roses and the pound will continue to be subject to conflicting news for the foreseeable future – However, should EU leaders decide during this Thursday’s vote to reject the extension of a special Brexit summit in November, we will be looking at a no-deal Brexit in March 2019 scenario. That something which experts have warned would be a catastrophe for the UK economy and the pound will surely get sliced up on the proverbial knife’s edge it is currently walking.
GBP/USD levels
Hopes for further gains are limited on a fundamental basis while technically there is a bearish outlook on the charts while below 1.3298 20th Sep highs. On the other hand, bears have been unable to penetrate the descending channel’s old resistance and the price remains above the 4hr 200-SMA. A break of the recent trend lows of 1.3040 and then 1.30, 1.2920, focus will be back on 1.2662, (as the Aug low level on the wide). The bears can then target 1.2589 as being the June 2017 low. 1.1985 is that H&S objective below there. On any positive Brexit news, the round figures to the upside such as 1.33 and 1.35 on knockouts will be attractive.
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