Sterling lost the sharp tone yesterday and went to a softer one today as UK gears up for the historic release for Article 50. GBP/USD bled -239-pips since Monday and plunged to 1.2376 low today over fears of consequences of what might outcome as PM releases the article. Traders has abandoned buying positions of GBP/USD high levels and left the pair to cast at lower levels with aggressive selling. On the other hand, U.S Index is showing a minor recovery today, with +$0.71 increase following positive U.S Consumer Confidence release yesterday with a positive 125.5 compared to 116.1 on previous sessions.
PM May has already signed the Article 50 letter, which will be delivered by Tim Barrow today at 11:30 GMT. Thereafter, the European Council (EC) President Donald Tusk will hold a press conference at 13:45 GMT on the UK Article 50 notification. The UK PM May finally invoking the Article 50 means the process of the Britain to exit EU’s membership commences, after the referendum vote held in June last year showed Brits favoring a Brexit by 51.9% to 48.1%.
Once the Article 50 is triggered later today, the terms of Britain's exit will have to be agreed by 27 national parliaments, a process which could take some years. Some EU leaders believe, it could take as long as 5 years to agree to new trading and immigration policies with the remaining countries In the meantime, the UK will continue to abide by EU treaties and laws.”
Timeline post-Article 50 trigger (via the Sun)
MARCH 31: Donald Tusk will give the EU’s remaining 27 member states’ initial response to Mrs May.
APRIL 29: Emergency summit of the 27 EU leaders to agree on the mandate for their lead negotiator Michel Barnier to conduct exit talks.
MAY 7: French presidential elections final run-off. Many believe serious talks cannot begin until we know who the next French president is.
MID MAY: Michel Barnier draws up EU’s negotiating guidelines based on the mandate given to him. The EU’s council of foreign ministers meets to sign them off.
LATE MAY/EARLY JUNE: Face-to-face Brexit negotiations between Britain and the EU begin.
SEPT 24: German elections, to decide if Angela Merkel continues as Chancellor or is ousted. Difficult for much to be agreed on Brexit until then.
OCTOBER 2018: Both sides want to conclude negotiations six months before Britain leaves the EU to give the Houses of Commons and Lords, as well as the European Parliament and other national assemblies, time to ratify the final Brexit deal.
We could see a ‘soft’ Brexit landing if the UK agrees to compromise on issues like the free movement of people in order to maintain access to the EU single market. Contrarily, a ‘hard’ Brexit would be inevitable, in case the UK fails to reach a deal for the single market access with the EU.
Remark: Due to uncertainties evolving currently around UK with correlation of Article 50, and U.S Index sudden recovery, market to expect high volatility for GBP/USD. A break above 1.2464 projects additional bullish waves towards Monday's range at 1.2535 & 1.2605. The opposite scenario, A penetration for 1.2337 will increase further selloffs and wash towards 1.2241 & 1.2112 intensively. UK economic data today could be ignored due to Article 50 topic being the main frame for Sterling.