Brexit: We’re Closer to the Date but Nothing is Changing

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( — February 28, 2019) — The Brexit situation seems unchanged since the 28 Member States endorsed the withdrawal agreement in mid-December 2018 and since its failure to pass in the House of Commons soon afterwards. While there are less than 40 days to go before Brexit, there is still no deal in sight.

On the 20th of February, the European Commission President, Jean-Claude Juncker, met British Prime Minister, Theresa May for another discussion. May hopes that her new legal proposals, presented to the European Union, will solve the Irish backstop issue and be enough to persuade Eurosceptics to back her deal.

But, as the chancellor Philip Hammond recently declared, “it is clear that the EU will not consider replacing the backstop with such an alternative arrangement now, in order to address our immediate challenge.”

Indeed, the alternative arrangement – the Malthouse Compromise – would definitely “require significant changes to EU legislation and customs practices that would need to be negotiated with the EU member states and others”.

While Brexit’s official date is approaching (March 29th), it seems that the probability of a no deal is increasing every day. There is however, an alternative scenario that could lead to a wise decision: to delay Brexit and extend the two-year deadline for exiting the European Union.

Nevertheless, as Britain did not request this postponement, both parties are now focused on preparing for a no deal Brexit.

This situation is quite straightforward, as it means the UK will leave the EU without any deal. More so, it also implies that there will be no transition period (21 months) and that businesses and public bodies, as well as consumers, need to respond immediately to the changes following the UK leaving the EU bloc.

This situation will certainly mean a hard Brexit, as the UK will be completely out of the EU (single market and customs union). This could in turn, have a negative impact on the financial markets, especially Forex which can bring great trading opportunities.

The GBP/EUR is one of the most affected currency pairs; also the GBP/USD is affected in forex. The Pound has been hit by political and economic uncertainty and concerns over whether the UK will be able to agree on a deal and what consequences it will have on its growth.

As Brexit approaches, no one can really tell what will happen to the Sterling. However, it’s important to highlight that there are other factors that impact the Sterling’s value. Central banks have the largest impact on the Forex market. Figures related to inflation, growth and employment are the most important factors when deciding monetary policies.

As Brexit turbulences have seen the pound yo-yo over the past 3 years, don’t let this situation negatively impact your Forex trades – instead, wisely use this volatility to your advantage.