(09 JULY 2018)DAILY MARKET BRIEF 2:Uncertainties around Brexit negotiations weigh on British pound

Eight months before the UK leaves the EU, it appears that the British government is facing a difficult task. After convincing Ministers on Friday concerning her Brexit plan, Prime Minister May is facing an additional challenge.

Indeed, British Brexit Secretary and leader of the negotiations David Davis announced his resignation, commenting the agreement as “weak and impracticable”, adding that he remains a “reluctant conscript” of the matter, a rather less-than-encouraging situation for May which needs to reorganize her Brexit Ministry.

Since the announcement, certainties as to UK’s capabilities to further support the development of a hard Brexit is weak, thus supporting the idea of a softer Brexit, in which the UK would remain in the customs union with the EU.

GBP/USD is bouncing off following recent decrease right after the announcement in spite of the positive impact that would a maintenance of customs union have on the UK economy and lower wage growth in the US. Currently trading at 1.3345, the GBP/USD pair is rising further, approaching the 1.3370 range (13/06/2018 high).

By Vincent Mivelaz