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Britain one step closer to severing ties with EU

Adam Wiffen Currency Broker - The week before the voteAdam Wiffen
Currency Broker
T: +44 (0) 1442 892064

Yesterday Britain published legislation to sever all political, financial and legal ties with the European Union, an important step towards their Brexit goals but one that which the opposition said it would challenge.

The repeal bill is at the heart of the government’s plans to exit the EU in 2019, unravelling Britain from more than 40 years of EU law making, and repealing the treaty that made Britain a member back in 1972. The bill passing through parliament could make or break May’s future as prime minister. The election she called last month cost May her party’s parliamentary majority and reopened the debate on the nature of Brexit.

“It is one of the most significant pieces of legislation that has ever passed through parliament and is a major milestone in the process of our withdrawal from the European Union,” Brexit minister David Davis said in a statement.

May faces a battle even within her own Conservative Party to stick to her plan of a clean break. Pro-Brexit lawmakers will give her little room for movement, while pro-Europeans are looking to soften the divorce terms.

Brexit has obviously had a huge impact on the value of the Pound. Since the vote to leave the Union the pound has weakened against the Euro by around 15%. The worry at the moment is that until we know which path the UK will take in terms of soft or hard Brexit we could see the Pound continue to struggle. A hard Brexit could push rates further down, with no trade deal in place with the EU the Pound will surely come under pressure as investors sell Sterling. If we see a soft Brexit and some sort of trade deal is struck, we could see the Pound strengthen. Unfortunately, we are still potentially a couple of years away before we fully understand the extent of what Brexit means, until then the Pound will continue to struggle to make back the ground it lost just over a year ago.

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Today’s data

It is a quiet end to the week with no economic data to note from either the UK or Eurozone. Any movement in the GBP/EUR cross will be more than likely be due to continuing political uncertainties. This afternoon may bring some volatility for GBP/USD with the US publishing their CPI and retail sales figures, any deviation from the forecast could have an effect of the value of the Dollar.

Adam Wiffen
Currency Broker
T: +44 (0) 1442 892064

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