Pound plunges as May stands firm; Brexit talks at an impasse

Summary:

UK PM May doubles down on Brexit stance
“UK and EU at an impasse”
GBPUSD set for largest daily drop since June 2017 (-1.4%); UK100 soars higher

There’s been a large drop in the pound today with the currency looking skittish after UK prime minister Theresa May reinforced or Brexit stance in a defiant speech. The PM was delivering a public update after her meeting with EU leaders in Salzburg and said that both parties were still a long way apart on two big issues - the Irish border and abiding by all EU rules.

GBPUSD was already lower on the day due to remarks from elsewhere that the Salzburg meeting wasn’t a success and a resurgent USD before May’s speech sent the market sharply lower. Source: xStation

She even went further to say that talks had reached an impasse and the rhetoric is very much in keeping with the notion seen elsewhere in recent days that the chances of a hard or no-deal Brexit continue to rise.

Selected comments from PM May’s speech are shown below:

Will never agree to customs border with Northern Ireland
No deal is better than a bad deal
Cannot accept anything that threatens the integrity of the union
Cannot accept anything that doesn’t respect the referendum

The pound has been on a good run of late, aided by some strong retail sales figures and an above forecast CPI print on Wednesday, but this looks to have come to an abrupt end today, with a large drop. With the GBPUSD lower by 1.4%, it is set for its largest single day decline in percentage terms since June 2017 and a large bearish engulfing candle is forming on D1. The worrying thing for pound bulls is that it is hard to much by the way of positive news coming to the fore in the next few sessions and as the deadline for reaching a deal grows ever nearer (various parties have said that October-November is the latest an agreement could be reached).

GBPUSD is on course for its largest daily drop in over a year with current declines of around 1.4%. The recent recovery from around 1.2660 is now under serious threat. Source: xStation

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