Talking Points
- The UK’s Brexit Secretary David Davis described the EU’s timetable for talks as the “row of the summer” in a television interview Sunday.
- Yet the British Pound has shrugged it off, suggesting the divorce is losing its capacity to influence the currency.
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David Davis, the UK’s Brexit Secretary, described in a TV interview Sunday the EU’s timetable for the divorce talks the “row of the summer”, rejecting the EU’s assertion that the rights of EU nationals living in the UK, Britain’s exit payment to the EU and the Northern Ireland border are the three issues requiring an early agreement.
What was interesting Monday was the British Pound’s reaction: there wasn’t one. GBP/USD continued to meander broadly sideways below the 1.30 level as it has since late April – suggesting strongly that the angry Brexit rhetoric from London and Brussels is losing its impact on the UK currency and the local stock market. Indeed, London’s FTSE 100 stock-market index hit a fresh record high in morning trading.
Chart: GBP/USD One-Hour Timeframe (April 27 – May 15, 2017)
That may have been in part because the news was offset by the latest opinion polls ahead of the UK General Election on June 8, showing Prime Minister Theresa May’s Conservatives with a lead of between 18% and 20%. However, it is becoming clear that developments elsewhere are pushing Brexit out of the limelight.
Oil production, possible economic slowdowns in the US and China, and a victory for German Chancellor Angela Merkel’s CDU party in the state of North Rhine-Westphalia at the weekend were all paid more attention than Davis’s comments. Moreover, news that May would take part in her first ever Facebook Live question and answer session with the public on Monday, in an event hosted by the same news channel, was almost totally ignored.
That’s not say that Brexit won’t be back in the headlines once the talks actually begin, but for now traders in the British Pound appear to be paying it scant attention.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
Follow Martin on Twitter @MartinSEssex
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