Sterling slips as May’s Brexit game plan looks to change course yet again

Technical Analysis

There potentially won’t be a meaningful vote tomorrow


This looks to be May’s next move and it only makes sense for her to put off a meaningful vote from taking place tomorrow or otherwise face an immeasurable defeat. She can’t call off the vote altogether as I reckon that means the government may be held in contempt but it looks like she will instead put forward a provisional vote of a revised Brexit deal – one with changes needed for the backstop.

The hope here is that parliament will vote in her favour and she can bring that back to Brussels in the coming two weeks to convince them to offer her concessions so that they can secure a Brexit deal.

However, it doesn’t change the fact that lawmakers who are backing the Cooper/Letwin amendment will still call to vote for a Brexit extension on Wednesday and Thursday. And chances are that will also succeed, regardless of May winning tomorrow’s provisional vote or not.

And May doesn’t really have much way in stopping that from happening as if she delays those votes further, expect a massive uproar in parliament to happen. She could face more resignations and political chaos could ensue. That’s among the worst-case scenarios for the pound in the coming days.

But beyond that, if a Brexit extension is approved and May wins the provisional vote, it’ll come down to a choice for European leaders/lawmakers at the EU Summit on 21-22 March. Who will they support? May’s Brexit deal or a Brexit rework with other parts of the UK government?

Only time will tell.

As mentioned earlier, the only certainty now is that we’re headed for more uncertainty when it comes to Brexit. Hence, that will continue to weigh on the pound until more clarity is found.

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