Britain heading down a soft Brexit route, or maybe not, GBP/USD offered

There has been a turn in sterling on the hourly sticks, backing away from the 21-D SMA where bulls penetrated earlier in the NY session's morning where the pair had been testing a fresh two week high at 1.3443. 

"Mrs May had planned to send the plan to Brussels this week, possibly as soon as Wednesday, but she was forced to put it on hold after Mr Davis led a rebellion by Eurosceptic cabinet ministers. Mr Davis was furious to discover that the draft plan — drawn up by Mrs May’s chief Brexit official Olly Robbins — did not include an end date to make it clear that any emergency measures to ensure a smooth Irish border were temporary," the article explained.

What are David Davis' concerns?

The FT wrote,

"The Brexit secretary fears the current version of the plan could leave Britain tied to the customs union indefinitely. It proposes keeping the whole UK within the EU’s common external tariff area, removing Britain’s ability to strike trade deals with other countries. Mr Davis is also worried that the backstop plan — the legal guarantee sought by Brussels to ensure a frictionless Irish border — could, in theory, last beyond the next election, which must be held by 2022. The British proposal would also keep the whole UK closely aligned with EU rules on goods to avoid new regulatory checks at the Irish border. Mr Davis fears this could give the European Court of Justice an extensive continuing role."

This is pushing Britain down a softer Brexit route, where previously, traders have bid the pound upon such sentiment member nations had switched from trying to give Britain a hard time in leaving the Union to looking for a ‘win-win’ solution for the UK instead. 

So why is cable offered?

May's backstop is leaving Britain in a 'halfway house' situation, the FT noted, "taking rules from Brussels, being subject to ECJ rulings and having no fully independent trade policy well into the next decade."

There is a clear divide in May's government over Brexit and it is throwing the whole procedure back up in the air before she is due to submit her plan for the Irish backstop before the European Council meeting on June 28-29 to show “progress” has been made on the issue. Failing to do so would likely stall the entire Brexit process and subsequently, bring prospects of a hard Brexit back into the debate - a negative for the pound. 

"Mr Davis’s frustration is rising and Mrs May can ill-afford to alienate the Brexit secretary — seen as a moderating force among the cabinet Eurosceptics — let alone push him to resign,"

the FT wrote.