wednesday morning brexit non-news from zero hedge

Sterling Whipsaws As Traders React To Barrage Of Conflicting Headlines
Tyler Durden, Zero Hedge, oct 16 2019

Conflicting headlines this morning between British and EU officials produced new concerns that a Brexit deal is on the verge of collapse. After a torrid, 3-day surge, Britain’s currency weakened, down -.25% to 1.2749 as Brexit negotiations were sent into turmoil due to resistance from the DUP, a Northern Irish party that Boris Johnson desperately needs for votes to get his agreement through parliament, reported Bloomberg.

The DUP objected to concessions Johnson offered to secure a deal with EU officials, among which one of the requirements is putting a customs border in the Irish sea. Bloomberg highlights the key Brexit overnight events that have already taken place:

  • Talks went on late Tuesday night in Brussels, resumed on Wednesday morning;
  • British and EU officials say the negotiations are stuck, with Johnson so far unable to persuade the DUP to back the draft deal;
  • UK government held talks with hard-line Brexit-backers and DUP officials;
  • Johnson needs a deal approved this Saturday or he will be told to seek an extension, which will likely prompt a legal battle with the risk of a no-deal exit

News of Brexit talks risking collapse certainly rocked markets around the 5 am EST hour (via Reuters):

  • Sterling Extends Falls, Now Down 1% Vs Euro And Dollar
  • Sterling Hits Day’s Low Of $1.2655, Now Trading At $1.2685, Down 0.8% On Day
  •  Britain’s FTSE 250 Extends Losses, Now Down 1.1% As Sterling Falls On Report Brexit Talks Risk Collapse On DUP Resistance
  • JP Morgan Domestically Focused UK Stocks Index, Hits Day Lows, Now Down 2.1%
  • Europe’s Stoxx 600 Also Extends Losses To Hit Session Low, Down 0.4%

Johnson losing DUP support is problematic. If he can’t get a deal approved by the British Parliament by Saturday, Britain will be thrown into a constitutional crisis that could trigger a no-deal exit.

Meanwhile, Bloomberg noted:

ohnson will be told to seek an extension to EU membership, but he has sworn not to delay Brexit further and a legal battle will probably follow.

At just around 6 am EST, the EU’s chief negotiator, Michel Barnier, tried to calm volatile European markets after Brexit talks seemed to collapse. Barnier said he optimistic about getting a deal done this week:

“Michel Barnier has told EU Commissioners he is optimistic of getting a deal done today,” reported, RTE reporter Tony Connelly. “It’s understood officials are confident that a solution can be found” on VAT. “It’s understood consent is also proving difficult, with a senior EU source saying the DUP are pushing to restore a tighter Stormont lock.”

  • Brexit: Michel Barnier Has Told EU Commissioners He Is Optimistic Of Getting A Deal Done Today – RTE Reporter
  • Brexit: DUP Are Pushing To Restore A Tighter Stormont Lock – RTE Reporter

A roller coaster of headlines, mass confusion ahead of this weekend’s deadline. Needless to say, the story is developing.

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