Yesterday evening, Tereasa May survived a vote of no confidence in her position as UK Prime Minister and leader of the Conservative Party, with an 83 majority win.
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Despite the majority, the 200 -117 result still reflects clear discontent within the Party caused by her handling of the Brexit process, however the number of votes she received was in fact more than she did during the closing round of her leadership campaign, in 2016.
The result means that she cannot face another vote for a year, providing some breathing space, however there is still the danger that a motion of no-confidence could be triggered in the House of Commons, which could bring down her Government if backed by more than 50% of all MPs.
Inevitably, Brexit remains the PM’s main cause for concern and following the result, May reiterated her intentions to put forward her Brexit proposal to a Parliamentary vote before January 21st, a key date detailed in the EU Withdrawal Act.
Prior to yesterday's vote, May held talks with EU counterparts to discuss the ‘backstop plan’ for the Irish boarder in an attempt to drum up support and she will now head for a 2 day summit in Brussels to seek political and legal assurances over the plan, which is a primary point of contention over the proposed deal. Numerous reports have also suggested that the EU has vowed not to budge and endorse any amendments to the current Brexit plan, but with less than 4 months from the exit date both parties will be looking for find a solution as soon as possible.
Despite the slight relief in political tension following last night’s result, uncertainty over whether a deal will be finalised remains a concern and the ominous no-deal outcome is therefore still a possibility, so expectations of subdued volatility in Sterling markets should be ruled out.
Even though Brexit developments have been a key driver of currency markets, economic releases also influence sentiment and the Bank of England’s Interest Rate decision next week, in addition to inflation and GDP data, could provide ingredients that could influence volatility leading up to their release.
Therefore, clients with a short – medium term requirement involving GBP, could benefit by assessing the various contract options available to them, in order to help manage the exposure to the live market.
For more information, please contact your account manager here or contact our trading floor directly on 01494 725 353.
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