Brexit Update - The EU Wins Round 1

21 June, 2017

Although not an outright conflict, the discussions surrounding the Brexit talks have been at best contentious and at worse polemic. Theresa May when outlining the 12 points of the Brexit strategy went on record in a speech declaring a victorious and resounding “Brexit means Brexit”. Shortly after the result of the Brexit Referendum Jean-Claude Juncker President of the European Commission asked Ukip MEPs Nigel Farage “Why are you here?” during a European Parliament meeting to discuss Brussel’s plan for Brexit.

Unfortunately for the UK the EU hasn’t suddenly turned a softer more compassionate leaf. Theresa May was forced to buckle under the initial demands of dealing with the exit fee before any other topics including trade agreements – which are arguably the most significant for the British economy since Europe is one of the UK’s largest markets.

Michel Barnier – the Union’s chief negotiator, also tore down May’s overly ambitious promises of leaving the EU – with all trade and immigration issues resolved – by 2019. According to Barnier, it was unlikely that any trade agreement would be made in the next two years.

To add insult to injury he was quoted saying about the Brexit talks “I’m not in a frame of mind to make concessions,” [sic] “the U.K. has decided to leave the EU. It’s not the other way around.”
No matter what the UK will leave the EU on March 29,2019 at 00.00 this means with a trade deal or without and markets responded with a resounding “Sell”.

The FTSE 100 dropped -0.49% to 7,488.54 down from the previous day’s close at 7,523.81. It seems that trader’s confidence waned in the Sterling also as GBP dropped from its previous closing price of 1.273 to 1.2637 against USD (-0.738%).

According to a poll conducted by Barclays Plc of 642 global investors regarding Brexit, this shaken confidence might not change – most of the polled investors said they saw the EU – UK talks being prolonged affair with delays and snags, and one of Barclays strategist even said that he assumed it would effect market sentiment.


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