15.11.201812:16 Forex Analysis & Reviews: Brexit: The Cabinet approved a plan for Brexit. Why is the question of the border with Ireland so important?

It became known that the Cabinet of Ministers of Great Britain was supported by the plan submitted by Prime Minister Theresa May to withdraw from the European Union. This will allow to count on the fact that the situation on Brexit will be resolved before the expiration of the time when the UK will officially leave the EU.

Such news, of course, supported the British pound, which returned to the area of weekly highs paired with the US dollar. However, as I noted in recent forecasts, the main problem for the British Prime Minister remains the approval of this agreement in parliament, where there are very many opponents of not even the agreement itself, but Brexit.

Theresa May said yesterday that the cabinet had a lengthy and detailed discussion of the draft Brexit agreement and ultimately approved the draft agreement. In her opinion, the agreement reached during the negotiations is the best scenario for the UK to leave the EU. May also said that the draft agreement will be submitted to the parliament today.

It is necessary to pay attention to the fact that even before the meeting of the Cabinet of Ministers, the British Prime Minister had already started having problems, although the Cabinet belongs to her party. The small Northern Ireland party, which, by the way, provides May with a majority in parliament, completely rejected its draft agreement. The representative of this party, Jeffrey Donaldson, said that the current plan undermines the constitutional and economic foundations of Great Britain. Even some Euroskeptics from the Conservative Party rejected the deal. Jacob Rees-Mogg stated that the plan was incapable of providing Brexit. However, as we already know, the cabinet still approved the current exit scenario from the EU.

There is much talk about the problem of reaching an agreement on Brexit, and the main reason experts point out the Irish border, on the issue of which it was difficult to reach a consensus. So what is it about it that took so much time to solve this problem?

It should be recalled that the sharp conflict over the status of Northern Ireland as a province of Great Britain was extinguished in the late 1990s. The agreement stipulated the elimination of the border between Northern Ireland and the Republic of Ireland, which allowed EU members to trade goods and services without restriction with each other. Now, when the UK leaves the EU, Brexit will change the principles of trade between the EU and the UK, which will again restore the border, which could turn into a conflict in Ireland.

As for the technical picture of GBP / USD, a breakthrough of resistance at 1.3040 will be a good prerequisite for the continuation of the strengthening of the trading instrument to the highs of 1.3100 and 1.3170. The main driver of growth for the pound in the first half of the day can serve as a report on the volume of retail sales in the UK. In the case of a pair decline, the bulls will return to the market on the test of support 1.2960 and slightly lower, from the minimum of 1.2890.