Cable down to 1.3379

Here's the problem:

Ireland is part of the EU and wants to say that way. Northern Ireland is part of the UK and wants out of the EU.

However, Northern Ireland (and Ireland) want a seamless open border where it's easy to do business.

The problem is that the UK and EU will have different rules and different authorities. If Northern Ireland wants 'full access' to the Irish economy then it needs to play by EU rules. However if it wants 'full access' to the UK economy, then it will need to play by UK rules.

It wants both and there is no solution. We're at an impasse and, unfortunately, Theresa May's government can only survive with the support of Northern Ireland's DUP.

So it's a quagmire.

Today, the UK and EU reached an agreement and Phase I of negotiations. The problem is that the Irish border deal was vague, they agreed to minimal barriers but really just punted and said they will come back to it.

That's not a good sign and while the headlines say 'deal' at the moment, it sets up a situation where the DUP could hold May hostage later.

As for the market, the thinking was that an Irish border deal was coming in Phase I. It makes a complete deal even more difficult.

At the moment, cable is down nearly a full cent to 1.3377.