The British pound collapsed on Tuesday after Chief Prosecutor and Legal Advisor of the Cabinet, Geoffrey Cox, said the new Brexit agreement did not reduce the legal risks for the UK.
The British currency wiped out the earlier appreciation and collapsed by 0.72% to 1.30585 USD, while the euro rose by 0.88% to 0.86246 GBP. Losses against the Japanese yen and the Swiss franc are 0.64% and 0.97%, respectively. The export-oriented index FTSE 100 rose.
The revised Brexit deal will reduce the risk of Britain being trapped in the customs union, but the legal risk remains unchanged. According to Geoffrey Cox’s interpretation of the new agreement, London cannot go unilaterally from the border section between the Republic of Ireland and Northern Ireland.
On Monday, Prime Minister Theresa May managed to make changes to the so-called backstop, which is a temporary decision to avoid the establishment of a hardline border between the Republic of Ireland and Northern Ireland.
Geoffrey Cox’s interpretations, however, point to MEPs backing Brexit to reject the new deal during the vote, which will be held later today.