Great Britain plays va banque (Afternoon analysis 21.09.2018)

The markets do not like the harsh moves of Prime Minister May. The pound is clearly depreciating, and at the same time, the growing risks of a disordered Brexit do not support the euro. The zloty is also going below in red - most to the franc and the dollar. The current euro exchange rate tests the 4.30 PLN boundary.

Yesterday's humiliation of the British Head of Government at the EU summit in Salzburg provoked Prime Minister May to make an unscheduled speech. Contrary to some expectations, the Chairwoman of the Conservative Party has not relaxed her position. She made it clear that a lack of agreement with the Union is better than a bad agreement, which has clearly shaken the pound's course.

Since the beginning of today's session, the sterling has lost 1.1% to the euro and less than 1.5% to the dollar. The British rejection of the previous proposal to regulate relations with the EU by European leaders increases the risk of chaotic exit from the EU by the United Kingdom.

It is also worth noting that the British Prime Minister is not only gambling for a sufficiently good deal with the Union. Today, it has been speculated that failure in Salzburg could cause it to resign and increase the risk of early elections to the lower house of the British Parliament. The elections, in the context of Brexit, pose an additional threat to the UK. It is also a debatable fact whether a hypothetical victory for the labourists would be good for the UK, given the extreme left-wing attitude of the Labour Party's leading representatives and their incoherent attitude towards a further referendum on the Brexit.

The confusion caused by the UK's exit from the EU has also put pressure on the euro. As a result, at the beginning of the US session, the EUR/USD fluctuated between 1.1730 and 1.1740, while at the beginning of today's session it was around 1.1800.

Global events also influence the zloty exchange rate. Sentiment worsening in Europe pushed the EUR/PLN to the 4.30 level. Much more, i.e. by 0.03 PLN, appreciated the franc, reaching the area of 3.82-3.83 PLN. The Swiss currency is also perceived as a safe haven in the Brussels-London dispute. Only a seriously depreciated pound noticeably loses to PLN. This is a logical reaction because at the end of the day Great Britain will be the biggest victim of disordered exit from the EU.