May hints at EU customs alliance, GBP unimpressed…
Theresa May addressed Parliament yesterday, confirming the 6 month flexible extension granted by the EU while also hinting at the prospect of a closer relationship with the European trading bloc.
Each day the current prime minister remains in power the more her own party become frustrated. This time the hard-line Brexiteers will be angered by May’s admission that she will be working closely alongside the opposition leader however ‘uncomfortable’ it may be. The latest developments show the PM attempting to devise a customs alliance with the European Union, one which would see a much softer-style Brexit that many had previously envisaged. No doubt, fractions of the Tory Party will be working tirelessly to devise a plan to oust May. However, while she is still in power she will continue to engage with Jeremy Corbyn to find a workable compromise.
The pound has remained in restricted trading ranges against a number of currencies this week. Against the US dollar, the $1.30 level has provided a good level of technical support while any rallies have been capped by the $1.3120 to $1.3150 zone. In GBPEUR’s case, €1.15 props up the pair while €1.17 is stalling any movement higher. The next few weeks will be important for the pound, failure by May to find a solution with the Labour Party will push the currency significantly lower. Any signs of successful ploys to oust her or for there to be a general election will also be a negative for the currency. On the flipside, any breakthroughs regarding compromise on the withdrawal agreement could see a decent move to the upside.
Today’s economic calendar is exceptionally light. Participants will mostly be digesting the news from earlier in the week regarding the ECB monetary policy meeting and Fed meeting minutes.
Have a good weekend.
Written by Viv Savani. 8:57am, April 12th 2019
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