Conflicting headlines this morning between British and European Union 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 Democratic Unionist Party (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
- U.K. 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; that 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 GBP=D3 EXTENDS FALLS, NOW DOWN 1% VS EURO AND DOLLAR
- STERLING HITS DAY'S LOW OF $1.2655 GBP=D3, NOW TRADING AT $1.2685, DOWN 0.8% ON DAY
- BRITAIN'S FTSE 250 .FTMC EXTENDS LOSSES, NOW DOWN 1.1% AS STERLING FALLS ON REPORT BREXIT TALKS RISK COLLAPSE ON DUP RESISTANCE
- JPMORGAN DOMESTICALLY FOCUSED UK STOCKS INDEX .JPDEUKDM HITS DAY LOWS, NOW DOWN 2.1%
- EUROPE'S STOXX 600 .STOXX 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.
Brexit is at most 372 hours away. #brexit— Brexit Countdown (@brexitcountdow1) October 16, 2019
Meanwhile, Bloomberg noted that "Johnson 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.