This week has seen the 5th round of Brexit talks proceed with EU sources describing a “constructive mood” yet no progress as such except for rumours that a deal on UK and EU ex-pats is nearer

Remarkably, there has been none of the usual leaks from either side which can only mean that indeed, very little has progressed and that the co-operation must be tighter between the negotiating teams. Earlier this week, both sides have said that the “ball is in the other side`s court” to which Monsieur Barnier said “this is not a game” when rounding on a BBC reporter when asked to comment on whose court was the ball in. remarkable stuff in such a high stakes game.  Monsieur Barnier`s feathers seemed quite ruffled as did UK`s Brexit secretary, David Davis when Chancellor Philip Hammond said that contingency measures and funds would only become available at the point at which they were really needed and at the last possible moment during his appearance in front of the Commons treasury select committee saying  “I don’t` believe we should be in the business of making potentially nugatory expenditure until the very last moment where we need to do so” as reported in The Financial Times: 

Having angered Eurosceptic cabinet colleagues who want more money to employ hundreds of additional staff to deal with the UK`s eventual departure from the EU (hard or soft Brexit), and who want to send a clear message to the EU decision makers that the UK is preparing for all eventualities, it was left to PM, Mrs May to slap her Chancellor down during Prime Minister`s questions in the House of Commons, saying;

“I can tell the House that the Treasury will write to departments and the Public Accounts Committee explaining this process shortly. So, where money needs to be spent, it will be spent.”

After her Eurosceptic Brexiteers were much happier upon her performance and comments during PMQ`s, and the tone was set for the 5th round summations from Barnier and Davis:

Monsieur Barnier kicked things off by saying there has not been enough progress to move to the next stage of talks. He went onto say there had been “new momentum” but that both sides are still in “deadlock”. That prompted a sell-off in Sterling across the board. He then went onto say “decisive progress is in our grasp within the next two months”. He added “I am not able in the current circumstances to propose next week to the European Council that we should start discussions on the future relationship”

Brexit secretary, David Davis, keen to move onto trade talks, highlighted the need for EU decision makers to give Monsieur Barnier the authority to move onto trade talks and “build on the spirit of cooperation we now have”. Hinting that EU decision makers might get involved and break the deadlock in current divorce talks? Ball still in their court? Perhaps one to look out for in the coming days. Davis went onto say that both sides were “closer than ever” to a deal on citizen`s rights.

Monsieur Barnier went on to say that Mrs May`s announcement that the UK would honour current financial commitments as “important”. “On this question we have reached a state of deadlock which is very disturbing for project promoters and taxpayers”. He went on to say that talks on the Northern Ireland border issues had “advanced” but with “ more work to do in order to build a full picture of the challenges to North-South co-operation resulting from the UK and therefore Northern Ireland, leaving the EU legal framework”

David Davis went on to say that issues surrounding UK and EU ex-pat`s being the same on “future family members, rights to export a range of benefits” (such as child benefits paid) “continue to enjoy the recognition of qualifications, voting in local elections and leaving for a prolongued period and yet to continue to enjoy a right to remain or permanent right of residence on return” No mention as to a cut-off date or whether current EU nationals living in the UK have to start from scratch in March 2019.

All-in-all, pretty much as expected but very disappointing that the ex-pats issue has not been finalised, when it could have been, should have been.

Where does all this leave me with my positions with Cable in mind?

We all enjoyed the long run up to the recent high, August to September 1.365 area.

We jobbed our way down to the 6th October low 1.30268 thinking that sellers wanted the spike through 1.30. Approaching that low, I jobbed some longs, taking expenses along the way whilst searching for the eventual low. I went long full-size break of 1.31 after failed tests of the low signalled a turn for me. Added the break of the 50DMA (31331 at the time), added again the break of the 23.6fib of the move down (31755). Locked profits in as we progressed, moving stops up into the profits zones. Added again break the 50 fib (32152) of the August 24th to September 20th up-move, locking in again. Added again on a pending long, break of 3250 triggered early today.

Then Monsieur Barnier, bless him. Bang! Stop blew on this morning`s add (stop 3230 below the 20hour MA). Lock-ins blew on the surge below leaving me handsomely in profit but I gave a lot away. That is so often trading for us. Back to close on where I started….long, yet again, the face-ripping Cable 31421 as flagged in our chat room. Price currently 31483 and still looking toward the BoE in early November trading expectations and dare I say it “despite Brexit”. See how we go.

Expectations remain low before the crucial EU summit next week where EU leaders need to declare whether sufficient progress has been made to move from “divorce” to trade talks. On the basis of Barnier’s comments today, expect the answer to be “Non”.

The Brexit Review is a series of posts following all things Brexit. Read the prior stories here.

Si Heath
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