Optimistic reports on a deal around the thorny Irish border issue were probably premature. An agreement that has a lot of “creative ambiguity” in it worried the DUP party that holds the British government intact. They threatened to bring down the May government if the union is in danger.
And now it seems that such an agreement between the Republic of Ireland and the UK is not really agreed. Simon Coveney, the recently named deputy PM, said that “we cannot be asked to leap into the dark”. He wants reassurances on regulations and gave the impression that avoiding a hard, physical border is still an open issue.
It is important to remember that we still do not have 100% certainty on the divorce bill. Reports talked about May agreeing to pay 45-55 billion euros, which also involves the same of that creative ambiguity.
Will the pound fall from here? It isn’t falling just yet and there are many optimists discussing a level of 1.37.
GBP/USD remains calm on the high ground, trading above 1.35. The high so far has been 1.3550 which emerges as a new line of resistance. Support awaits only at 1.3340, which was the cap for the previous wide range of 1.3030 to 1.3340.