Email of the day on reading the Brexit tealeaves
Comment of the Day

January 17 2019

Commentary by Eoin Treacy

Email of the day on reading the Brexit tealeaves

It seems to me that the little move up in GBP and some "local" plays (banks, home builders) reflects higher chances of the UK remaining in the EU custom union.

Eoin Treacy's view

The Telegraph is reporting Philip Hammond told business leaders Article 50, which is the bill to remove the UK from the EU, will be extended and even be shelved in coming days. Meanwhile, close colleagues of the Prime Minister are floating the idea of a Norwegian solution which is effectively EU membership in all but name.

The Labour Party are still hoping for an election, (of course they are), but are calling for a potential hard exit to be taken off the table and Jeremy Corbyn said today he could be willing to consider another referendum. The Cabinet office estimates a fresh referendum could take 14 months to organise. That’s seems rather long but, in any case, this saga is not going to end soon.

This article by the eloquent, and often colourful, Nigel Farage, may be of interest but its tone suggests he is readying for a rerun of the referendum campaign. Here is a section:

Mrs. May’s long-standing friend, Damian Green MP, has given a strong clue as to what lies ahead. He has cited Norway, saying it is not in the Common Agricultural Policy, the Common Fisheries Policy or under the European Court of Justice. But remember, Norway voted twice not to join the EU and its politicians signed it up the European Economic Area anyway. This supposedly independent country must accept free movement of people, obey EU single market laws and pay EU financial contributions. Norway’s political class overrode the will of its people. Much the same is happening here.

By far the likeliest outcome now is the activation of the Article 50 clause allowing for an extension , there being no Commons majority for anything else. Indeed, I have already been told by the Secretariat of the European Parliament that Brexit is dead. My arch-opponent in Strasbourg, Guy Verhofstadt, has even joked that the worst part of the UK staying in the EU is that Farage will come back.

Brexiteers must accept that the Brexit betrayal is happening. In line with my new year resolution, I am preparing to fight the European elections on May 23 and working with Leave Means Leave to assemble a cross-party campaign to fight a second referendum, should one occur.

Not to do so would be negligent. It would also betray the 17.4 million people who voted for the UK’s independence.

After dedicating 25 years to getting Britain out of the EU, I shall return to the battle lines if I must. And I will do so with more determination than I have ever shown before.

Every time the market believes the UK will remain close to the EU, the Pound rallies. The pattern versus the Euro over the last three years has base formation characteristics suggesting the balance of probabilities is a hard Brexit is unlikely. If that is the eventual outcome then there are going to be millions of people who feel disenfranchised.

I agree, homebuilders like Taylor Wimpey have posted impressive rebounds over the last three weeks but they are now at the first area of potential resistance represented by the sequence of lower rally highs and the region of the trend mean. Let’s see a higher reaction low before concluding more than a short-term low has been reached.

Lloyds Banking Group is firming from the region of the 2016 lows and is also testing its sequence of lower rally highs.

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