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Daily Brexit update: If there’s Hell below…

Back into the Twilight Zone we go. Or is it “hell”? One of just two amendments to Theresa May’s Withdrawal Bill which MPs voted in favour of last week was one tabled by Tory Grandee Sir Graham Brady. It called for the Northern Ireland backstop to be “replaced with alternative arrangements”. Comments by the PM in the wake of the vote suggested she understood and essentially accepted the demand from the House. Yet, perhaps stung by accusations that she was about to “shaft” Norther Ireland, by rescinding previous support for no hard border in Ireland, comments by May in Belfast yesterday were at odds with MP’s wishes, including those on the pro-Brexit side of her party. “What Parliament has said is that they believe there should be changes made to the backstop”. Even clearer, the PM stressed that she was “not proposing to persuade people to accept a deal that doesn’t contain that insurance policy for the future”. EU Council President, Donald Tusk was exasperated enough to countenance “a special place in hell” for those “who promoted Brexit, without even a sketch of a plan”. He will have the opportunity to repeat the admonishment in person to Theresa May when they meet to discuss the backstop. Who can guess how those talks will go. Either way, with Downing Street reportedly drawing up plans for a short delay of the negotiated exit date, in the face of imminent-looking optics, markets are keeping their nerve.

How this affects our Brexit Top 10 markets:

GBP/USD: Cable’s smallest daily range for 11 weeks could be ominous in context, or it could just reflect uncertainty and the essential stasis of the times. With more Brexit news combined with a hamstrung BoE ahead on Thursday, waiting and seeing is a respectable option. The biggest technical news so far this week is the loss of the long-term trend gauge, the declining 200-day moving average. So far, the fall below could still be a dip, though with the rate also beneath its 21-day exponential moving average, which rallied last month, traders are on guard. With loss of the $1.30 handle and plunge to as low as $1.2922 on Tuesday, only $1.2865 support looks credible for now. An uptick of some 18 pips was leaking at last look. The high since $1.3009 support broke around 24 hours ago was $1.2975, a little earlier.

GBP/JPY: Also meandering, the yen has topped at 142.45 up from a big bear attack that bottomed at 141.63. The rate peaked at 144.17 just a couple of days ago.

EUR/USD: Two-week lows were the spoils of the latest batch of poor economic readings and market rates pushing the first ECB hike till the end of 2020. Breach of 1.1390/1.1400 support backs deflating oscillators that call for deeper lows soon.

EUR/GBP: Almost static at the same resistance as Tuesday, 88.13p, implying a ‘double top’. Any reversal should first eye kick-off lows near 87.22p.

UK 100: Well received earnings weren’t enough to stem the pull to take profits after a string of gains in recent sessions. Still the index is looking to close a few points higher.

Germany 30: Blame a dire set of earnings from Daimler for much of the German index’s soft session. It’s closing down 0.3%.

Lloyds: A 0.3% rise with help from new technology announcements.

Barclays: A 0.7% gain in step with Wall Street.

Barratt: Relief from solid half-year earnings, despite looming Brexit lifts the shares 2.5%.

Tesco: UBS’s target price upgrade lifts the shares 1.9%.


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