Brexit Latest: Chancellor Merkel's Optimistic Talk on Irish Backstop
Brexit Latest: News, Updates and Sterling Technical Analysis
- UK PM May travels to Ireland to reiterate her opposition to the backstop.
- German Chancellor Merkel says time should be used by both sides to solve the deadlock
Sterling (GBP) Sentiment Waning but German Chancellor Merkel May Offer Hope
Sterling continues to trade in a tight range, but the bid is drifting lower as the Brexit clock continues to tick down. UK PM May will reiterate her opposition to the current Irish backstop arrangement at a talk in Ireland today, but thousands of miles away another, perhaps, more important speach was delivered by German Chancellor Angela Merkel. At an event in Tokyo, Chancellor Merkel said that there was still time to solve the Irish backstop before adding, ‘But this solution depends on the question of what the future relationship between Britain and the EU will be like and what type of trade deal we sign with each other’.
The EU negotiating team however are still sticking to the line that the Withdrawal Agreement is not up for discussion and cannot be reopened. However, with just over seven weeks to go before the UK leaves the EU, Europe’s largest economy is now, openly, mentioning trade deals alongside the current Irish backstop problem.
GBPUSD has been gently drifting lower since Friday’s bumper US NFP data release gave the US dollar a boost. Sterling remains in a range and is looking for the next stimulus to force a move. The Bank of England ‘Super Thursday’ meeting is likely to produce some headlines, especially after the release of the Quarterly Inflation Report, but BoE governor Carney will need to tread carefully, and leave all his options open, when discussing the path of monetary policy in the next few months. Sterling has also just been knocked back towards the GBPUSD 1.3000 level after a poor UK PMI Services release highlighted that UK growth may have stagnated at the start of 2019.
GBPUSD Daily Price Chart (May 2018– February 5, 2019)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at email@example.com
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.