Brexit: the UK is making progress and risk is gradually being reduced - AmpGFX

Greg Gibbs Founder, Analyst, & PM at AmpGFX explained that the GBP continues to trade off the ups and downs in UK politics and news flow on Brexit dealings inside the Tory cabinet, the UK parliament, and with the EU negotiators.  

Key Quotes:

"The news can be overhyped and hard to interpret, making for difficult trading in the GBP.

The GBP had a setback in June 2017 after PM May took the UK to a national election in hopes of securing a larger majority and a clearer authority to negotiate with the EU on Brexit.  However, she failed miserably and clings to power with the support of the Democratic Unionist Party of Northern Ireland. 

Since then, there has been the odd rumour that she was about to be ousted by her own party causing periods of weakness in the GBP, especially late last year. However, her resilience and a lack of credible alternative have helped calm political risk in the UK.

Towards the end of 2017, Brexit uncertainty eased significantly after protracted negotiations over a ‘Divorce bill’ were resolved, allowing talks to move onto the crucial issue of trade and a transition period after the 29 March 2019 Brexit date.

On 19 March this year, the GBP received good news that the UK and EU had agreed on a transition period that would extend the status quo until the end of 2020.  In the transition period, the UK is free to start negotiating trade deals with other non EU countries, and it gives companies breathing space to plan for post Brexit arrangements.  However, the UK is still supposed to meet the March 2019 deadline for agreeing on the terms of a Brexit deal.

The thorny issues of trade relations and the closely related topic of what to do with the Ireland/Northern Ireland border are now being hotly debated inside the Tory cabinet.

Time is running short to meet the March 2019 deadline, and a highly divided UK parliament has to vote on a final deal, but from afar it looks like progress is being made.  The key issue for the economy and GBP is reducing uncertainty for business and retaining as much access to the EU market as possible.  It does appear that the UK is making progress and Brexit risk is gradually being reduced."