UK: On course for a hard Brexit? - Rabobank

According to Jane Foley, senior FX strategist at Rabobank, the strength of last night’s vote in the UK’s House of Commons against PM May’s Withdrawal bill makes it very clear that there is no deal in place between the UK and the EU. 

Key Quotes

“Technically this means that the economy is on course for a hard Brexit.  Understandably, many UK businesses will be worried by this outlook.  The pound, by contrast, is currently trading at firmer levels than yesterday.  Despite the legal predicament of the UK economy, investors are taking the view that a hard Brexit is unlikely and that last night’s Commons vote has not significantly altered that risk.”

“Going forward the confidence of GBP bulls is likely to be sapped if there is little near-term progress in finding a Brexit compromise and if there is no effort to push back the exit date on March 29. Confirmation that the Brexit start date is set to be delayed would send a strong signal that parliament is not prepared to send the UK over the cliff edge without a deal being first in place.  This could be sufficient to create a sizeable GBP rally.  That said, a delay would also imply that uncertainty about the shape of the Withdrawal Bill is likely to extend for longer.”

“Additionally, the fact that talks about the UK’s EU future relationship are set to extend for another two years after the start of Brexit suggest that the pound has a long way to go before it finally shakes off the mantle of political uncertainty.   In the near-term, EUR/GBP has the potentially to pull back to the 0.87 area, and potentially below, if it is confirmed that May will seek a cross party compromise and push back the start date for Brexit.  PM Question Time at noon GMT today and the subsequent parliamentary debate triggered by Corbyn’s no confidence motion will be keenly watched by UK markets.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD stays sidelined around 1.1650, monthly resistance line in focus

EUR/USD picks up bids to 1.1642, keeping the two-day advances intact during the early Asian session on Monday. The currency major pair stays firmer above 10-day and 21-day EMAs amid bullish MACD signals. August month’s low adds to the upside filters.


GBP/USD treads water near 1.3800 after mixed UK data

GBP/USD came under bearish pressure in the early European session after the data from the UK showed an unexpected contraction in September Retail Sales. However, the British pound managed to pare its losses with the Markit PMI figures surpassing analysts' estimates.


Gold: Bears lurking at weekly trendline resistance

The price of gold has been supported by a dynamic weekly/daily trendline where bulls consolidated and finally made a break for the upside in the latter part of the week. The price move into the $1,800s but has failed to take out the weekly trendline resistant, so far. 

Gold News

Crypto bulls unfazed by flash crash

BTC closed more than 5% lower on the Thursday session, but buyers have stepped in to hold the Tenkan-Sen as support. ETH action shows that the recent rejection has caused some indecision. XRP does not have far to move to initiate a massive bullish breakout.

Read more

Apple talks over battery supplies for EV stall-Reuters

Apple (AAPL) is on a steady move higher ahead of results next week. We have had solid earnings from big names already such as Tesla (TSLA) and Netflix (NFLX), but Apple is the biggest one of all and will be the highlight of the earnings season for many.

Read more