What will happen regarding Prime Minister Johnson's meetings with the German and French leaders and this week's developments? [From Rikio Shima's newsletter]
From the investment email magazine “Shima Rikio’s Practical Real Trade” by Shima Rikio, provided by GogoJungle, here is a small excerpt from last night's issue.
Today, the Merkel-Johnson summit is being held. From Merkel's remarks, she said things like "will discuss with Johnson need for Friction-Free Brexit" (to discuss with UK Prime Minister Johnson the goal of a Brexit without friction or conflict), which sounds like aiming for a controlled “no-deal Brexit” in a measured, orderly way.
Germany has traditionally been gentle toward the United Kingdom.
However, just now a French official commented that "a no-deal EU withdrawal by the UK is now the central scenario." At the same time, there is a stark statement: NO-DEAL MEANS REINSTATING BORDER CONTROLS IMMEDIATELY: FRANCE (a no-deal withdrawal would mean immediate reintroduction of border controls). Tomorrow’s Macron-Johnson meeting is expected to be tough.
Recently, a UK government secret document leaked outlining what would happen in the event of a no-deal exit, and it described predictable consequences such as shortages of food and medicines and border chaos. A fairly significant amount of turmoil would occur temporarily.
However, in the no-deal scenario it is known that there would be huge chaos and a substantial fall in the pound, but the final decision will be made on October 31. Until then, trading will be based on the possibility of a hard Brexit, and the market may feel a bit fragile. Following the French government sources above, the pound-dollar and pound-yen have moved downward, but levels around 1.2115 and 128.90 seem firm and are bouncing back.
The situation may be similar for other currency pairs. The Australian dollar and New Zealand dollar have hardly moved. Dollar/Yen cannot break into the 105 range, and the upper 106s are also heavy. There is little direction.
‘Shima Rikio’s Practical Real Trade’ (Shima Rikio)quotation.
During Prime Minister Johnson’s visit to Germany and France, reactions in the two countries seem to differ. A no-deal Brexit would bring about UK turmoil and pound weakness, but since a final decision is still two months away, this week's market appears to be in an adjustment phase. (Editorial staff)
