We are now just over one week away from one of the most important votes in British history when MPs will be voting on 11th December on Theresa May’s Brexit deal. At the moment it appears as though she is falling very short of the numbers needed to get the deal through but with five days of debating ahead, starting from today, we could see a very volatile week ahead for the Pound.
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The proposed deal was presented to the House on 26th November, and this will be looking at the agreement on the future relationship between the UK and the European Union.
The House of Commons will be asked to approve the deal before Brexit can be approved, and the deal will be closely scrutinising the issue of the Northern Irish backstop and plans as to what a future UK and European Trade deal will look like.
With the deal being voted on in just over a week as there are so many issues at stake the chances are that the vote may even be extended by a day in order for politicians to have enough time to debate the issue.
In the meantime, media reports have suggested that if this deal is not agreed then MPs may be given another option to avoid a ‘no deal’ Brexit, which could be catastrophic for Sterling if a ‘no deal’ occurs.
Indeed, the Bank of England recently commented that Sterling could potentially drop by 25% but personally I cannot see this happening.
Bank of England governor Mark Carney will be addressing the markets at 09:15 this morning and previously he has been very cautious in his tone towards Brexit.
With the recent comments from the Central Bank suggesting a big fall could be around the corner I think his speech could be rather negative and suggest that the UK should agree some kind of deal.
On Wednesday a statement will be released by the Financial Policy Committee which will assess the risks to financial stability. In recent years British banks have been increasing their balance sheets and have been passing their stress tests so I think this statement could provide GBP with some support unless they focus on the risks associated with Brexit.
Later on Wednesday the UK will announce the latest Services PMI data for November which is expected to show a small increase compared to last month of 52.5 so this could also help support the Pound.
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