Brexit’s topic is again overwhelmed with rumors: the fewer days until the planned British release date from the EU (March 29), the more versions of further developments appear. Information published in the press is often controversial, so it’s impossible to talk about its authenticity.
In turn, the pound is not so keenly responding to insiders – traders are cautious and in no hurry to open certain positions based on dubious rumors especially because Theresa May is still confident in her success, at least in the public sphere. Its position is at odds with the disseminated insiders, and the market looks confused against the background of such contradictions. The pound / dollar pair reacts impulsively to these events, although the price returned to its original positions almost immediately. However, this situation may change soon – after all, Theresa May will speak in Parliament tomorrow, where she will talk about the results of the “European voyage”.
Despite today’s press conference of the premiere, a certain intrigue of tomorrow’s speech still remains. At the weekend, two influential British newspapers immediately published articles, the essence of which boils down to postponing the date of Brexit. According to one publication, the transfer is initiated by London: the government is allegedly preparing a request to Brussels with a request for a two-month extension of the negotiation process. According to another publication, the European Union itself is interested in the postponement of Brexit – Europeans are supposedly ready to postpone the X hour for almost two years, that is, until the beginning of 2021. According to information sources, this initiative is supported by “several key European countries.” However, for this postponement to be agreed upon, the British government must first request it.
Considering Theresa May’s public rhetoric, the above scenarios look unlikely. However, it all depends on whether the prime minister can lure the majority of deputies to his side. During today’s briefing in Sharm el-Sheikh (where the joint summit of the EU and the League of Arab States is taking place), she announced that the vote on the deal will be postponed again – approximately until March 12. Tomorrow, she will tell British deputies about the results of negotiations with the EU leadership and the leaders of key countries of the alliance. After that, regular consultations with parliamentarians will begin – May will convince the members of the House of Commons again that Europe will not make additional concessions, and the proposed option of the deal is final and uncontested. Yet, it remains an open question whether the deputies will agree to compromise.
Unfortunately, traders are forced literally to gather information bit by bit about the prospects of Brexit. If we exclude rumors broadcast by the British and European press, then there is almost nothing left in the “dry residue”. Representatives of the negotiating groups practically do not comment on the course of the negotiations, and the press secretaries of the first persons speak about veiled and vague messages. Therefore, May’s speech in the parliament tomorrow will make it clear: what concessions did Brussels agree to (or did not agree to) and whether the government is ready to accept the new conditions – if, any preliminary compromise with the EU was reached again.
According to an unofficial information, the parties agreed to develop additional guarantees for the mechanism of backstop. In other words, London and Brussels can make a political declaration that complements the main deal, which will spell out certain guarantees regarding the Irish border. However, there is no more detailed information yet – there are only guesses and assumptions of experts.
Theresa May also prefers not to spread ahead of time. In Egypt, she only said that her meetings with European colleagues “were successful” and she has “good feelings” that London will be able to make a deal. She also spoke out strongly against the postponement of Brexit, since, in her opinion, this solution would not help solve the problem. In general, it is set to agree on all positions with the British Parliament until March 12 and come to a vote, so that on March 29, the country would leave the EU.
It is likely that tomorrow in the parliament (the speech is scheduled for approximately 18:00 Moscow time), May will repeat the voiced theses. She will also talk about preliminary agreements with Brussels. Then everything will depend on the reaction of members of the House of Commons, although tomorrow’s comments from the deputies should not be guided. After the public speech, backstage talks will follow. Thus, on March 12, the deputies may still support the deal, despite possible preliminary criticism.
Therefore, tomorrow (or evening, rather) will play a big role for the pound. The unpredictability of the situation reduces the value of technical analysis: a pair of GBP / USD can either move up to the boundaries of the 32nd figure, or return to the area of 27-28 figures. The third option is not excluded: if May confines only to general phrases, the market can completely ignore this speech, although this option is unlikely.
The material has been provided by InstaForex Company – www.instaforex.com