Brexit Mess

Up at 3:00 am and watching the gyrations of the UK parliament. The bottom line?

1. It is law that says the UK will leave the EU on March 29.
2. It is law that Article 50 prescribes the UK will leave the EU on March 29 unless:

• The UK asks for an extension and
• The EU unanimously agrees to the extension. 

The EU has made it clear that it will not grant the extension unless the UK makes it clear the reason for the request.

The motions that took place are meaningless unless the law is changed – unlikely to happen.

This leaves the only choice: the UK leaving the EU without a deal – despite the motion tonight that ‘the UK will not leave the EU without a deal under any circumstances’. The alternative?

Acceptance of the May deal, a deal which has been rejected twice.

So, by March 29, we’ll know if I am right.  And, if I am right, what will it mean for the EURUSD and GBPUSD?

Currently, the pairs have rallied since March 6 (EURUSD) and March 11 (GBPUSD). Thus, if the UK leaves on March 29, it may be a shock to the market. In the same way, the original Brexit shocked the market.

We saw a drop of over 3000 pips over 15 weeks. I don’t see a move of the same magnitude. But, a decline of 1000 pips within 10 weeks would not surprise.

Let’s see what happens….

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