It’s an important week for UK Prime Minister Theresa May and the ongoing Brexit saga. On Tuesday, MPs will be back in the House of Commons to vote on whether to accept the deal with the EU that is on the table. Last week the Attorney General Mr Cox returned from Brussels with no major concessions to the ‘Backstop’ agreement, therefore unless MPs have had a change of heart, you would expect the deal not to gain a majority. If this is the case, this creates uncertainty and history tells us the pound could therefore come under pressure.
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On the 13th, MPs will then get to vote on whether the UK should crash out of the EU with no deal. Commentary coming from MPs and the voting patterns we have seen on previous amendments would suggest that this will fail to get a majority also. The last vote of the week will be whether the UK should apply for an extension of Article50 which will take place on the 14th, however the vote could be pushed forward to the 13th to save time.
Over the last 2 ½ years the pound has gained value on the back of positive news from the ongoing Brexit negotiations. Based on these historical trends, it is possible that the Pound could gain value this week if Theresa May manages to persuade MPs however any other outcome could put pressure on the pound due to the uncertainty it will create. If you are buying or selling the pound in the months to come, this week could have a major impact on the exchange rates you will receive. For example, the day that the UK public voted out over 2 ½ years ago, within 24 hours the pound had lost 8 cents against the euro. Major volatility should be expected this week and I would strongly recommend speaking with you trader to outline your requirements.
This week Brexit is going to be the main talking point for the UK like it has been for the last couple of years, however there are a few data releases to look out for also. Industrial and manufacturing production numbers are to be released Tuesday. Both data releases have been struggling of late due to global slowdown and Brexit. If the numbers fail to impress once more, one may expect the pound to be on the backfoot before MPs have the meaningful vote. In addition, the Chancellor will give the budget on Wednesday.
With the Conservatives under pressure due to Brexit this budget will be extremely interesting as some expect the Chancellor to try and strengthen the Conservative position for the next election.
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