Brexit, a Mass of Confusion

A change of mind.

Recall, that I was originally of the view that Brexit would result in a “no-deal” exit. I had taken the view that with the European Research Group and the DUP Impeccably against May’s deal, the only way out was either “no exit” or a “no-deal exit”.

That has now changed.

In the past few days, we have seen:

• Parliament took control of the exit process with a view to doing a better job than May. No such luck. Last night, we saw 11 alternatives all voted down. Including ‘no-deal’ and ‘remain in EU’.
• Rees-Mogg has indicated that the ERG will support the deal if the DUP does likewise.
• Many of the Tory members who had voted against the deal have now indicated a change of heart.

What does this all mean?

It means that May has until Friday to have her deal ratified. If that should occur, then Brexit will occur on April 12. If her deal is again rejected, then Brexit will occur on May 22 without a deal. If a longer extension is required, the UK will need to take part in the EU parliamentary elections.

However, last night, two of the indicative votes were:

1. Brexit could not be on a no-deal basis.
2. Also, many parliamentarians have indicated that they are unwilling for the UK to participate in the EU elections.

So, the picture is still as clear as mud. From my point of view, it was time to close the EUR USD short positions. Here’s the reason why:

May’s deal is now totally dependent upon the DUP. So far, it is still sticking to its guns and refusing to back the deal. However, its history shows that it is likely to change its mind at the last moment. Should that occur, then we are likely to see a strong and violent reaction upwards in both the EURUSD and GBPUSD. On the other hand, should, on Friday, the May deal fail, then we are just as likely to see a violent move down.

Since I don’t have a firm view on what the DUP is likely to do, I prefer to be out.

How would you trade the situation?

The post Brexit, a Mass of Confusion appeared first on Ray Barros’ Blog for Trading Success.