A spanner In Brexit Bill progress

As Theresa May’s Brexit plan steamrollered its way through the House of Commons with a 372 majority and no amendments. It moved to the House of Lords where it looked likely the Prime Minister would be able to trigger Article 50 by the middle of March, to begin the formal process of leaving the EU. However, a spanner was thrown into the works on Thursday. A number of peers in the House of Lords stated they were confident in being able to force changes to the Article 50 Bill or The European Union Notification of Withdrawal Bill as it has now been named and disrupts Theresa May’s schedule.

The two-day debate begins on Monday 20th February, during which time it is expected 150 peers will try to speak. There are three main amendments likely to be discussed during the debate:

  • An immediate, unilateral guarantee that the rights of the 3 million EU citizens in the UK will be protected after Brexit.
  • A written guarantee that Parliament will be given a ‘meaningful’ vote on any final deal that the Prime Minister secures.
  • Regular Updates to Parliament on the progress of Brexit negotiations, with a minimum of one every three months.

Any amendments successfully passed through would force the Prime Minister to wait for at least one week before proceeding, I believe even if this were to happen the Prime Minister would still be able to achieve her mid-late March deadline to trigger Article 50. On the other hand, one Labour source in the House of Lords is said to believe it is possible to “push the Bill back to the Commons for another go at changing it”. If this were to happen it would without doubt make the Prime Minister’s target of triggering Article 50 before mid-late March unachievable.

How could this affect your currency transfer?

Markets never deal with uncertainty well, this is especially true in the foreign exchange market. Theresa May’s Brexit speech on 17th January offered more clarity on her vision, including the 12-point plan which caused GBP/EUR rates to jump more than 2 cents from 1.136 to 1.158, earning you an extra €4,400 on a £200,000 transfer, showing just how changes in Brexit related uncertainty can earn or cost you. This House of Lords debate could throw the Brexit process back under another cloud of uncertainty. If there are any significant delays as the Bill makes its way through I expect GBP/EUR rate to drop from the current 1.17 levels down to mid 1.15.

Economic data releases this week

On Tuesday at 9:30am Producer Price Index (PPI) and Consumer Price Index (CPI) figures are published. Both releases have the potential to shift Pound Sterling exchange rates. If they show inflation to be rising further, potentially beyond the Bank of Englands (BOE) 2% target rate it will further fuel increasing worries shown by businesses in a recent Ipsos Mori poll of more than 100 large companies, 58% of which felt costs had significantly increased since the referendum due to the weaker Pound.

If you have any Pound related requirements in the upcoming months it may be worth getting in touch with your personal broker here at Foreign Currency Direct, who can help you to understand how upcoming events such as the House of Lords debate and other political news may impact you. Call us on 01494 725 353 or email me at jms@currencies.co.uk.

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