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Brexit draft agreement reached, what’s next for the GBP?

Nov 15, 2018 | Forex News

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A Brexit daft agreement has been reached between the EU and Britain. The EU’s chief Brexit negotiator Michel Barnier says “decisive” progress has been made in reaching a final agreement on the UK’s departure from the European Union. The 585-page draft withdrawal agreement is seen as a crucial step in completing negotiations. The Irish border which has been one of the sticking points looks like avoiding a hard border. The deal still needs to get through the British parliament but has passed Theresa May’s cabinet.

The draft withdrawal agreement covers so-called “divorce” issues as the UK prepares to leave the EU in March 2019. It includes a “financial settlement” from the UK, thought to be about £39bn (€45bn; $50bn). Speaking at a press briefing in Brussels, Mr Barnier addressed one of the major concerns of the divorce, the Irish “hard border” issue. He said to avoid the need for physical checks on goods or infrastructure at the border between Northern Ireland and the Republic of Ireland, the EU would work with the UK to agree a trade deal. However, if talks fail, the so-called “backstop” measure would be used. – BBC

A transition period which was previously set at 21 months may be extended by mutual agreement. My Brainer did comment that any extension would by a one-off, “by a limited period and by joint agreement”. He said the draft deal delivers “legal certainty” on the consequences of the UK’s divorce from the European Union. There are also special protocols in place for Gibraltar and Cyprus to enable people there “to continue to live as they do today”, he added. Mr Barnier made the point that while this agreement represented progress, there was “still work to be done”. – BBC

October set up good rallies from lows after Brexit developments. The GBP to the USD and JPY have been held by overall highs and ranges. After a three day decent this month price has rallied as news filtered through that progress was being made. Yesterday’s trade was volatile with price closing flat after strong moves higher and lower. Today price has been more subdued then expected after the draft agreement passed cabinet. The GBPUSD has added 20 pips but the GBPJPY remains fault. Traders might be waiting for how things go in parliament and if it can be passed by the November 21st.

GBPUSD remains in multiple ranges with the newest setting up in yesterday’s session. With a higher low bullish bias looks to have a favor for now. 

GBPJPY remains rangebound on the short-term. Key resistance remains at 149.30. A lower high has formed from 146.15 buyers have started to lift price moving towards the European session open but resistance remains on the short-term from 148.43 – 148.75.

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Sources; The BBC  – All times are AEDT

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