Uncertainty around the future of Britain’s relationship with the EU has been clearly reflected in GBP price action this week, with sterling cratering to levels not seen since April 2017.
The catalyst behind these fresh moves was the news of UK PM May aborting a “meaningful final vote” in Parliament on the day it was to take place due to fear that the motion would be defeated.
In a bid to establish more support in Parliament, May is to return to Brussels to seek “extra reassurance” on the issue of the Irish backstop to make absolutely certain that a “hard border” will be avoided.
Merkel Says No More Negotiations
However, May’s meetings were fruitless. Merkel told the UK PM that there would be no more negotiations on Brexit and while efforts would be made in order to give May the reassurances she feels will be helpful in getting the deal through the house of commons, there is no more time for any negotiation between the UK and the EU.
“No Room Whatsoever” For Further Negotiations According to Juncker
May’s meeting with Juncker struck a similar tone with the EC President telling May there is “no room whatsoever” for further negotiations. However, Juncker told reporters that:
There is room if used intelligently, to give further clarifications and interpretations without opening the withdrawal agreement. Everybody has to know the withdrawal agreement will not be reopened.
Tusk To Discuss Further Assurances
Donald Tusk, President of the European Council made his feelings clear on Twitter, writing:
I have decided to call #EUCO on #Brexit (Art. 50) on Thursday. We will not renegotiate the deal, including the backstop, but we are ready to discuss how to facilitate UK ratification. As time is running out, we will also discuss our preparedness for a no-deal scenario.
The situation is becoming particularly dire. The deal between the EU and the UK as it currently stands is highly likely to be voted down in Parliament, even with the extra reassurances which May is pursuing and to a large extent, the sentiment in Parliament has become about a broad turn against May.
Technical Perspective
The break of the prior 2018 low in GBP/USD (1.2693) is a very bearish technical development showing the resumption of the downtrend which has stalled over recent months due to conflicting reports around Brexit.
With the bearish channel from 2018 highs intact, the next support level to watch is around 1.2139 where we have a raft of prior lows. Below that is the bearish channel support line which comes in just ahead of the post Brexit 2016 low at 1.1428