The Brexit saga continues. The Salzburg summit is surely something Theresa May will want to forget quickly. Waking up to news like is not a happy Friday:
“May humiliated as Europe leaders tell her your Brexit plan won’t work” – The Guardian
“Humiliation for May as EU rejects Brexit plan” – The Times
“May humiliated by European leaders who reject Chequers as unworkable” – The Daily Telegraph
The list continues. Add to the above headlines that Macron was calling the pro Brexit politicians liars while May simultaneously was speaking in a separate room. Macron went on warning the UK that it will suffer consequences from having chosen to abandon the EU. He added “It is not costless, it is not without consequences”.
The GBP reacted by reversing recent gains and putting in a rather bearish candle so far. 1.30 is the first bigger level to watch should the GBP continue lower.
3 month ATM volatility spiked higher post the humiliation in Salzburg. 10 is a huge level here and don’t be surprised if we take out that level as more and more investors need to hedge exposure as we get closer to the Brexit deadline.
Source: charts by Bloomberg