Sterling (GBP) Talking Points: Brexit
- New cross-party alliance; no deal Brexit now highly unlikely
- A potential one-year Article 50. extension could see a second Brexit vote put to the public.
The DailyFX Q2 GBP Forecast[1]s are available to download including our short- and medium-term look at Sterling.
Fundamental Forecast for GBP: Neutral
UK Prime Minister Theresa May this week reached out to the leader of the Opposition Jeremy Corbyn in a renewed attempt to break the current Brexit deadlock. The cross-party talks were said to have been constructive but inconclusive but the olive branch from the PM while angering some of her Party is seen by many as finding a way to leave the EU, however ‘soft’ the plan is. This week also saw Parliament vote for a bill to stop the UK from leaving the EU without a deal although as yet this is not a legal position. And to end the week, UK PM May asked the EU for an extension to Article 50. until June 30 to help break the deadlock. In response, the EU is expected to turn down this request and instead offer the UK a one-year ’flexible extension’ with the inclusion of a break clause if the UK ratifies a deal with the EU.
This week’s moves point towards a softer Brexit outcome although there is still a possibility of a General Election that could spark volatility. GBPUSD[2] seemingly remain bid around the 1.3000 level but despite the positive news the current – small - soft Brexit premium built into Sterling is being gently eroded. It may be that Sterling traders are starting to
