EURGBP FUNDAMENTAL ANALYSIS+CHARTING|BREXIT NEWS

23 Jun 2020

It is evident from this chart that the pair is full of nice levels. The price is currently at a narrow channel's resistance area, with the greater 4 year Brexit channel resistance being within the reach.

However, the big news is that the UK and the EU in a surprising move, decided NOT to extend the deadline of the post Brexit transition period, which means that the UK and the EU will stop treating each other as if still being together in the Union, as they do now, on the 1st of January 2021, or in less than 6 months.

Considering that simply exiting the EU took Britain almost 3 years, and the first part of this year was entirely consumed by the coronavirus, I highly doubt there were any future trade arrangements negotiations going on. Which begs a question of how on earth are the UK and the EU negotiate the new deal in just 6 moths?

That development, indirectly indicates a softer deal, as that would be the one that would be happily accepted by the EU and the only one that can be struck in 6 moths. The alternative is exiting with no deal whatsoever, but that is highly unlikely the plan.

Seems like the softer deal will be motivated by the economy being crushed by coronavirus and not being ready for another Brexit blow, and also by that the voters are tired by the coronavirus and are unlikely to get captivated by yet another Brexit related saga.


Now, regardless of the outcome, once the 2021 hits, there will be CERTAINTY at last. And, by looking at the chart above it can be seen that GBP lost 33% to EUR since the Brexit vote. Whatever the consequences of Brexit may be, I am convinced that the British economy did not suddenly become 33% less productive. Therefore, 2021 will see Pound strengthening significantly as the capitals will get their certainty back and return to the safe haven of the misty island.

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