Orbex Market Flash

EU Summit Passes Without Progress As May Offers "Nothing New"

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The crucial European Summit held this week, intended to agree on a solution to the Irish Border issue and pave the way for a special Brexit summit in November to confirm the details of the UK’s withdrawal agreement, has ended without progress.

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“Nothing New”

The head of Belgian parliament told reporters that during UK PM May’s presentation to EU leaders, the British premier offered “nothing new” while Antonio Tajani said that May’s message was one of “goodwill” but was short on substance. As a consequence, European leaders have reportedly told ordered officials to step up their preparations for a “no-deal” Brexit and the chaotic fall out which could ensue.

However, EU leaders have reportedly left the potential for a further summit in November, open, which will come as welcome news for May who will be glad of the extra time. The UK PM is still under heavy pressure from Brexiteers who feel that she has conceded too much as well as pressure form Remainers who are concerned that the UK will leave the EU without a deal.

Key Issues Still Unresolved

Tajani told reporters that the two sides had discussed the potential for extending the UK’s Brexit transition period from 21 months to 33 months which, EU leaders said they could be open to, though they still have concerns over key issues such as the status of Northern Ireland. However, such an outcome would be met badly by Brexiteer politicians in the UK who fear that the UK will remain in a permanent EU limbo still paying into the EU while unable to influence the policy agenda.

Next Move Down To The EU

Despite the lack of progress, the PM’s official spokesperson told reporters that May remains “confident of a good outcome.”  However, for now, the market waits to hear whether the EU will convene another summit in November which will be the decision of the EU’s Brexit negotiator Michel Barnier who has the power to call another meeting if he feels that “decisive progress” has been made.

Technical Perspective

The German Dax is still under pressure this week. After breaking down through the 11700.6 level last week, price has since retested the level from the underside with the level now holding as resistance. While below here, the focus remains on further downside, with the rising long-term trend line from 2012 lows being the next key technical level to watch.

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