UK open to a Norway styled transition deal is ignored by the pound
A story from the Independent overnight suggests that the UK is open to a Norwegian styled transition deal. The story might be bigger if it was suggesting that a post-Brexit deal would by agreed on this basis but it only refers to the transition period, which by and large means that no change to the rules the UK follows now.
The really key point though is if the UK agrees to abide by ECJ law rather than UK law during the transition, and that’s what is being suggested here. Really, it’s not the transition phase that’s the big issue but what happens after.
The story cites EU Brexit sources so we can assume that maybe at some point today, we’ll have a UK spokesperson popping up to set the record straight from the UK side.
In the meantime, GBPUSD has flushed the 1.40 barrier by trading to a high of 1.4003 but has not tripped the large stops lurking above 1.40. We’ve since slid to 1.3942 on what looks like a bout of heavy yen buying, which in itself looks like post-BOJ move and possibly some disbelief about what Kuroda has told us this morning.
As per my post yesterday, I’m short from 1.3995 and I took half off at 1.3975. I’ll run the rest with a trailing stop. 1.3930/40 was support yesterday so we’ll see how we do here again today.
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