The British pound is expected to face extreme volatility today and depending on how the market interprets British Prime Minister Theresa May’s speech, the currency could go either way.
In what now promises to be a drawn out protracted war, the EU put forward there demand for Britain to leave the EU in 2019 which left the UK in shock and in particular Prime Minister May who noted that no Prime minister would ever accept such demands.
The 2 sticking points are the Irish boarder and the transition period after march 2019 where Britain has requested a period of 2 year’s where’s the EU would rather the sooner the better Britain leave the block.
Even if May sets a positive tone in here speech, many predict that it the skeletons are out of the closet with both sides prepared to stand their ground on what deal they want in regards to Britain leaving the EU which is going to pressure the pound for the foreseeable future.
“A little more than a year ago, GBP/USD was trading with a 1.20 handle on Brexit fears. I’m not sure things are really any better today,” said Marshall Gittler, chief strategist at ACLS Global, in a note.
“As the moment of truth creeps ever nearer, the difficulties involved in unscrambling 40-odd years of cojoined development become ever clearer. I think GBP has plenty more downside to go before a solution is found, if indeed it ever is,” he added.