The market might be missing the point about May and Davis going to Europe

The Independent story about Davis heading to Europe for emergency talks, and then subsequent stories about May going too, may not be as positive as some might think.

Firstly, Downing street are saying May was already scheduled to go to for this meeting, although the press only found out today, so make your own judgement about that. And, secondly, the Independent article suggests that France and Germany are trying to put the block on an EU draft that last week tipped that internally, the EU should start preparing for trade talks. Apparently the Germans and French want to omit that part on “additional guidelines” that contain the language about trade talks. That’s not a pound positive.

Although the Independent story doesn’t directly link the trade chatter and the Davis trip together, that could be part of why he and May are now travelling under the guise of trying to solve this “deadlock”.

If the pound rises it could be because the market sees the UK trying to attempt to resolve this deadlock, when in fact they’re trying to fight a fire from Germany and France.

One thing that stand out to me, if all this in the UK press is to be believed, is that this smacks of desperation from May and Davis to try and change Barnier’s mind before the EU meeting to decide whether enough progress has been made to move on to trade talks. If May is going there to promise to pay the divorce bill, or to at least talk numbers, then we might have a positive outcome from all this. If not, the EU are going to give the latest round of negotiations a big thumbs down, and that will hit the quid.

Once more we’re stuck in the middle of a great big Brexit trading mess and that’s going to mean a lot of headline volatility, which as we know in the pound right now, is very dangerous.

Whatever you do with trading this, just be careful.


Ryan Littlestone

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