After several months of protracted negotiations between the United Kingdom and the European Union, UK Prime Minister Theresa May took the stage and participated in a five-hour cabinet meeting to secure approval for her Brexit deal. It was not a simple event and there is high speculation over senior opposition to the terms secured by May, but the major takeaway is that a split cabinet has supported Theresa May’s Brexit plan.
What this ultimately means for investors and despite it not being final yet is that the ongoing risks around a hard-Brexit have hopefully been avoided.
This is mostly a positive development for the Pound that is at time of writing up for the second successive day against the Dollar, but the buying reaction in the GBP is not that exciting and suggests traders are still unconvinced that this is the end of the story when it comes to the longstanding Brexit uncertainty.
The warning that there was still opposition to Theresa May’s deal despite just over four months remaining until Brexit is supposed to officially take place presents a risk of the Pound dropping from its current levels close to 1.30.
Investors do ultimately need consistent indications that the outcome of the discussions will indeed be a soft-Brexit to maintain a GBPUSD valuation above 1.30.
Yuan and EM counterparts attempt to stabilize
Softness in the Dollar for the second consecutive day has allowed emerging market currencies, for the most part, to consolidate after taking a beating when the Greenback unexpectedly hit a new 2018 high at the start of the week.