Both French President Emmanuel Macron and British Prime Minister Johnson have made comments to the press ahead of their planned meeting today.
French President Emmanuel Macron has described the backstop as the ‘protector of stability in Ireland,” reiterating that both sides needed to prepare for a possible no-deal Brexit, even though both parties did not desire this outcome. According to quotes taken from Reuters, Macron had this to say:
“There will be more discussions on the future relationship…no one will wait until October 31 for a good solution.”
“The coming month must be useful, but can’t change the Withdrawal Agreement…In the month ahead we will not find a new Withdrawal Agreement,” Macron further opined.
On his part, British Prime Minister Johnson reiterated his position on the UK’s exit from the EU with or without a deal on October 31. However, he sounded optimistic that a deal could be done.
“I think we can get a deal…I was encouraged by talks in Berlin. We can find a way forward,” Johnson said.
Macron’s pessimism and Johnson’s optimism seem to have provided the impetus for divergence of the Euro and the British Pound, with the EURGBP falling to as low as 0.9093, before recovering to 0.9117.
Outlook for the EURGBP
In the last month, the British Pound has taken a battering over fears of a no-deal Brexit. With this possibility now firmly priced in, further talks aimed at finding a new withdrawal deal to be pushed through parliament now hinges on the so-called ‘Irish backstop’.
With a reintroduction of stimulus packages in the Eurozone widely believed to be scheduled for September, any form of progress on renegotiations of the Withdrawal deal will be GBP-positive, which could see a selloff in the EURGBP.
The EURGBP has found temporary near-term support at the S1 pivot after forming a hammer candle and could retest the central pivot resistance at 0.9140. An upside break of this level will open the door to the 0.9166 and 0.9189 price levels. A downside break of 0.9117 brings 0.9091 and 0.9068 into focus.