Futures, Cable Slump As Germany Denies Brexit Breakthrough

Update: Reuters reports that German government officials have denied the Bloomberg report, confirming that their position on Brexit has not changed. Cable has pared its gains…

Futures, Cable Slump As Germany Denies Brexit Breakthrough

And futures slid…

Futures, Cable Slump As Germany Denies Brexit Breakthrough

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As critical dates loom for the Brexit process, Bloomberg reports that the British and German governments have abandoned key Brexit demands, potentially easing the path for the U.K. to strike a deal with the European Union, people familiar with the matter said.

Futures, Cable Slump As Germany Denies Brexit Breakthrough

As Bloomberg details, Germany is ready to accept a less detailed agreement on the U.K.’s future economic and trade ties with the EU in a bid to get a Brexit deal done, according to people speaking on condition of anonymity because the discussions are private.

The U.K. side is also willing to settle for a vaguer statement of intent on the future relationship, postponing some decisions until after Brexit day, according to an official who declined to be named.

The shift means that widespread opposition to U.K. Prime Minister Theresa May’s proposal for the future relationship – known as the Chequers plan – isn’t necessarily an obstacle to getting a divorce deal.

A fudged political declaration on the future relationship may also make it easier for May to approve the backstop, according to Mujtaba Rahman, managing director at Eurasia Group, in a note on Wednesday.

“EU negotiators are now calculating that the British prime minister will be able to sign off on the EU’s backstop in the Withdrawal Agreement because she will be able to argue –pointing explicitly to the political declaration — that it will never need to be implemented,” Rahman wrote.

Negotiators in the U.K. and EU were once planning a document of up to 100 pages; now it could be just a tenth of that, officials say.

The reaction to this headline was immediate buying in cable…

Futures, Cable Slump As Germany Denies Brexit Breakthrough

And US Equity Futures also jumped…

Futures, Cable Slump As Germany Denies Brexit Breakthrough

Still, German Chancellor Angela Merkel warned on Tuesday that “we don’t want these negotiations to fail, but we can’t rule it out completely.”
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