EUR/GBP, GBP/JPY, & GBP/USD near Breaking Points as Brexit Fears Resurface
- UK Prime Minister Theresa May signals triggering of Article 50 by March 2017.
- Increasingly looking like a 'hard Brexit' is a likely outcome.
- See the DailyFX economic calendar for the week of October 2 to October 7.
The British Pound is back in the news due to its weak performance across the board today, after UK Prime Minister Theresa May outlined a more definitive timeline for the 'Brexit' over the weekend. The Great Repeal Bill, as it's purported to be called, will trigger the sever the tightly knit sovereign bonds forged those decades ago. What the UK PM had to say was quite revealing:
"We are going to be a fully independent, sovereign country - a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts...And that means we are going, once more, to have the freedom to make our own decisions on a whole host of different matters, from how we label our food to the way in which we choose to control immigration."
In context of what we already know about the European Union's negotiating position about Brexit - essentially, 'bugger off' - there's little reason to think that this process will be smooth. The fact is, the powers that be at the European Union have a vested interest in seeing the union stay together and succeed, so they will make the actual Brexit as uneasy as possible so as to deter other potential disenfranchised states from ending their formal membership in the EU.
Concurrently, with politics finally meeting reality - don't for a second think its a coincidence that the British Pound topped this summer the day after UK Parliament came back into session - GBP-crosses are under pressure this morning, and appear to be setting themselves up for a period of greater and volatility.
Whereas other major currencies have seemingly lacked a unifying thematic driver (the US Dollar's sensitivity to the Fed, for example, is dropping pre-US elections), GBP-crosses are moving in lockstep around Brexit-related headlines. As such, the multi-week consolidations that we've been eying in EUR/GBP,GBP/JPY, and GBP/USD may finally be on the verge of resolving themselves.