News

GBP surges on May and Corbyn’s shift in approach 

Products You May Like

Time for a change of tact 

So the GBP has rallied on the two fold news that Brexit may possibly be delayed by May and that Jeremy Corbyn’s Labour Party will formally back a second referendum. The second referendum will be to go back to the British public and say, ‘are you sure?’ This idea is really the personification of ‘nagging doubt’ : Do you really, really want to leave the EU. We know you said you did in a hot rage the last time we asked, but now you have had chance to cool down I wanted to ask you again.

Labour needed to make a move as they were increasingly be viewed as the party of irrelevance. I mean, they didn’t actually want to really do anything aside from criticise the Tory Government without offering a decent solution. Furthermore, the defection remain supporters to teh new Independent Group formed of ex Tory and Labour MP’s, made the move more necessary. Corbyn has said previously that he is in favour of a sort of customs union and wants access to teh single market. His version of a soft Brexit is thought by some to leave Britain a second class citizen of the EU with the obligation to abide by most of it’s rules, but influence none of them. The worst of both worlds. If the UK was discontent in the EU before this kind of deal envisaged by Corbyn you can imagine what they would be like after it. 

However, the GBP has rallied on the hopes of a second referendum tackling the 100 EMA on the weekly chart and the pivot point on the Weekly chart. Get and stay above and that opens up the path to the 200EMA. 

Theresa May’s address yesterday gave us three key votes to come:

  1. 12 March is the  meaningful vote
  2. If vote above fails then 13 March vote on whether commons would support leaving with no deal and then;
  3. If MP’s reject no deal then there will be a vote on extending article 50 which May hopes to be a ‘short delay’

The outcome here, at this stage,  looks like a delay to Brexit. The spike in the GBPUSD yesterday after May’s address was on Labour’s support of a referendum. Until that point the GBP was being sold off. The market was reacting to the hope that Britain would all wake up one morning and say ‘It’s ok world, Brexit was just a bad dream- we’ve woken up and changed our mind’. The general relief now will be on , at very least, a delayed Brexit. However, a delay merely kicks the can down the road and creates more uncertainty which the BOE has said has been weighing on business investment in the UK.  From here I am neutral on the GBP waiting for short term catalysts to move the GBPUSD in difference directions on the varying headlines.   

ForexLive

Products You May Like

Articles You May Like

Bitcoin price hints at a correction as BTC market sees over $2.6 billion per day in realized profit
USDCAD trades up and down this week with the pair now higher. What can we expect now?
Gold has second thoughts after testing $2200
US crude futures settle at $80.63
Italy targeted GDP and 1% for 2024

Leave a Reply

Your email address will not be published. Required fields are marked *