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Brexit Takes A Turn for the Worse, Again

The Brexit issue came back into the spotlight in the last two months, after coronavirus had taken all the attention since March, leaving Brexit and other issues in the shadows. The comments weren’t positive at first, reversing GBP lower, but we heard some wishful thinking in the last couple of weeks, but today’s comments are not that positive. As a result, GBP/USD reversed down from the 200 SMA (grey) and lost more than 100 pips. Below are some of he main comments:

European Commission president, Ursula von der Leyen

  • We have sent letter of formal notice to the UK over internal market bill
  • Internal market bill is by its very nature a breach of the Brexit withdrawal agreement
  • If adopted, it will be in full contradiction
  • Commission has decided to send a letter of formal notice to the UK
  • UK has one month to respond to the EU on the letter
  • This is the first step in an infringement procedure
That’s pretty much all there is to say for now. It’ll now come down to whether or not the UK will look to amend the bill at the House of Lords but that surely will also cause plenty of internal complications with Boris Johnson and his aides. Given the situation, we may very well be headed for yet another situation where the can gets kicked down the road to November. But for now, let’s see how the UK will respond. GBP/USD tumbled lower, but is off earlier lows of 1.2820 now.

UK Spokesperson Responds

  • We have clearly set out reasons for introducing measures on NI protocol
  • Will respond to EU legal letter ‘in due course’
In other words, “we’re sticking by what we are doing” and “we’re not going to blink first”. Once again, we’re going to be playing a game of chicken over the next two weeks.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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