The chances of a no-deal Brexit in October are increasing. Boris Johnson continues to stand firm over his demands that the EU scrap the Irish backstop in order to achieve a Brexit deal. However, the EU has once again confirmed that they will not concede any ground over the issue. They remain adamant that the Irish backstop is to be part of any deal. In response to a letter written by Johnson to EU leaders this week, reiterating his call for the backstop to be scrapped, EU leaders quickly rebuffed his calls for “flexible and creative solutions” and “alternative arrangements”.
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Tusk Shoots Johnson Down
In a telling insight into the level of opposition to Johnson’s demand, Donald Tusk wrote on Twitter:
“Those against the backstop and not proposing realistic alternatives in fact support re-establishing a border [between the Republic of Ireland, part of the EU, and Northern Ireland, which is part of the UK]. Even if they do not admit it”.
Johnson said that the EU’s response to his letter had been “a bit negative”.
Johnson To Meet Merkel
Followed Johnson’s latest failed attempt at persuading the EU to drop the backstop, Johnson is due to meet with German chancellor Angela Merkel in Berlin later today. Merkel has been calling on both sides to co-operate in order to secure a deal which works for both parties.
However, Johnson is adamant that the backstop needs to be scrapped or significantly reworked. He said that “we can’t get it through parliament as it is”. Consequently, if a compromise cannot be found over the issue, then it seems the UK is headed for a no-deal Brexit.
Can Parliament Block A No-Deal Brexit?
Despite Johnson’s insistence that the UK will leave the EU without a deal if needs be, on October 31st, many Labour and other opposition MPs have vowed to block a no-deal Brexit from taking place. Indeed, Jeremy Corbyn, the leader of the Labour party, has vowed to table a vote of no confidence against Johnson if he attempts to pass a no-deal Brexit. He aims to replace the government with a temporary administration which could delay Brexit, and allow for general elections to take place.
However, Corbyn is, as yet, struggling to garner the necessary support for such move. Instead, many opposition MPs are currently investigating whether they are able to pass legislation which would require Brexit be delayed. MPs are hoping they can repeat the actions taken by backbenchers earlier this year who took control of the Commons order paper to mandate Theresa May to request an extension to Brexit. However, this is a difficult parliamentary process and time is running out. For now, the UK edges closer towards a no-deal Brexit, led by Boris Johnson
For now, GBPUSD remains glued to the bottom of the bearish channel which has framed price action over the year to date. Still sitting above the 1.20 2017 lows, price is vulnerable to a squeeze higher but 1.2382 should cap any upside. Thus keeping the focus on further losses. The next major support level is down at 1.1415. To the topside, any break above 1.2382 will put focus on 1.2577 next where we also have the bearish channel top offering confluent resistance.
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