Will EU and UK reach an agreement?

Pound’s quotes include too much negative

Happily ever after and…got acquainted after that. The UK and the EU had lived together for a few dozens of years; they have been divorcing for quite a long time; but only now, the sides are facing the risk of a no-deal breakup. The plan, suggested by Theresa May, suits neither Brussels nor London. The supporters of soft Brexit claim it to be too hard; their opponents believe the Prime Minister to make too many concessions. The European Union is even more puzzling.

She said ‘no’ so emphatically that he immediately understood she had agreed! The EU top negotiator Michel Barnier had rejected the plan, proposed by London; next, he claimed it to suggest many good points; after that, in a private talk with the Austrian chancellor, he noted that that the deal with Britain is 90% complete; and, finally, announced that the agreement would be signed within the next eight weeks. In the same vein, European Commission president , Jean-Claude Juncker  has acted. First, he rejected; and then, promised to be working day and night to reach a compromise and strike the deal. These speeches increase uncertainty, push the market volatility up, swinging the pound price up and down. Many investors held out a naïve belief that a clearer situation may support GBP. As a rule, when they say “clear”, you understand that they have already rejected you.

You can well fish in troubled waters and succeed; especially since Reuters experts suggest that if the deal is signed, GBPUSD quotes will be 6% up. In case they fail, the pond will be 8% down. Finally, the supporters of soft Brexit turned out into the GBP bulls, the fans of hard Brexit became the bears. The first party likes the beginning of the phrase “you either appear and never disappear, or disappear and never appear”, the second one likes the ending. Central banks prefer to be neutral. When it comes up to a fight, they are the best at watching it around the corner.  Both the ECB and the BoE see the breakup between the UK and the EU as a reason to make a pause. Who knows what it will be in the end? You may need to raise the interest rate, like Turkey, to set back devaluation; or, you may have to ease the pressure, to avoid recession.

   

The pound quotes include so much negative that it is surprising how it can still stay afloat. I wonder what if the sides decide to make up as it happens sometimes.

-Honey, I love you so much that I will always be by your side!

-Don’t ever threaten me again!

It seems to be impossible to step in the same river twice. Both London and Brussels learned from their own experience that the bond of marriage is so heavy that could be carried by two of them. Sometimes, even by three. But still, admit, it is really exiting to follow the situation in Great Britain. Everybody knows that politics and ABC have a lot in common. For example, there are a lot of voiceless consonants. The UK policy can be different, soft and hard, but it is in no way boring. Well, the more interesting it will be next. Stock up with popcorn, Gentlemen!


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Price chart of GBPUSD in real time mode

Will the Pound Step in the Same River Twice?

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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