What to Look out for Today – Brexit Friction in May’s Cabinet

11 / 08 / 2017 | Market News
May’s cabinet seems to be split directly down the middle in regards to how the UK will proceed with its Brexit negotiations. In actuality her cabinet has been split into three camps – hard Brexit proponents that seek an expedited divorce from their EU partners, moderates and the majority group which seek a gradual Brexit to avoid abrupt economic repercussions.

Although the hard Brexiters want a rapid transitional period and immediate trade talks, as it has been shown, the EU’s Brexit committee refuses to talk trade agreements if the UK’s financial and EU citizens’ obligations aren’t covered and set.

In the midst of a mountain of recently released negative economic data – this the last thing the GBP needs. The problem is that the Brexit negotiations are closely tied, at least on a level of market sentiment, to the stability of the Euro. We have seen the one-currency’s price fluctuate with the announcement of new Brexit announcements, news or statements. Some even estimate that it could affect USD or more appropriately counter-affect; trader might retreat to USD as an alternative to the volatility seen in two of the world’s most frequently traded currencies.

In addition to the internal political turmoil surrounding the Brexit negotiations, the climate between the UK and its EU counterparts has been at best combative. Since the beginning before the enacting of Article 50, Theresa May took a hard-line to the process of leaving the EU – Brexit means Brexit. This unfortunately set the tone since then, with both parties treating the negotiations as a hostile take-over instead of an attempt to find mutually beneficial compromises.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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