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The GBP firmed modestly late Friday on news that UK PM May had prevailed in gaining her government’s cabinet approval for a Brexit negotiating plan at the much-watched gathering at Chequers, the official country residence of the PM, notes Greg Gibbs,
Analyst at Amplifying Global FX Capital.

Key Quotes

“This yet another hurdle for holding together her leadership and the Conservative government.”

“The negotiating plan will be seen as a positive outcome for UK business, but of course, it still has to be agreed by the EU.”

“The plan provides a path to a more certain outcome for UK goods-producing companies, preserving much of their current trading status with the EU.   A better outcome, most agree, than leaving the EU without a deal in March 2019. A positive for the UK economic outlook and the GBP.”

“However, it would restrict the kind of deals the UK might be able to agree with the USA and other non-EU countries, a point of contention for the Brexiteers in Cabinet.”

“Also positive for the GBP is the simple fact that May has prevailed again.”

“May will never be able to make both sides happy.   But she is doing the job of finding an acceptable middle ground that both sides can begrudgingly accept.”

“If the EU decides to knock down this plan, because the UK has attempted to cherry pick from the EU single market rules, they know they also risk triggering a collapse in the UK government.   This would be a high stakes gamble, and a reason why the EU may accept the main tenants of the UK’s new plan.”

“There will be more hurdles ahead for PM May, the UK government, economy and GBP, but having cleared this one, the outlook for GBP has improved and it may strengthen further in coming weeks.”