Prime Minister May has no doubt faced some busy and influential weeks so far in her relatively short tenure, but this week looks set to be the most monumental yet, with today’s vote on her EU withdrawal deal in the House of Commons.
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It could also be an extremely significant week for the Pound, with a raft of potential scenarios following today’s vote that are all likely to have an impact on the Pound. Possibly the most detrimental outcome for the Pound would be a no-deal Brexit, but over the last few days the chances of a No deal are looking far less likely. Theresa May stated in a speech yesterday that there would be no Brexit at all if her deal is rejected and we saw the Pound gain some momentum as a result.
Pushing for support for the deal she has on the table, May insisted that if her deal is not passed through there will be no Brexit at all and that it was her duty to ensure that the will of the British people to leave the EU was upheld to avoid ‘a subversion of the democratic process’.
Following the speech MP Gareth Johnson became the 13th Tory to resign over Brexit because he cannot accept the proposed Brexit deal and this just goes to show the uphill task that Theresa May has to face later on today.
If May does manage to get the deal through then a smooth Brexit on the March 29th deadline becomes more likely and some of the uncertainties hanging over the economy and therefore the Pound will be removed. The general consensus however is that the deal is likely to be rejected, with over 100 conservative MPs publically voicing their opposition to it in recent weeks. A small margin of defeat however could leave scope for an amended deal to be passed through on a second vote.
The most likely outcome would appear to be a fairly significant defeat for May’s deal, which will mean she would have three days (by next Monday) to present ‘Plan B’.
Following this we could be faced with a vote of no confidence being issued by Labour which may lead to a General election. A second referendum is also a potential outcome, or an extension of article 50 beyond the March deadline to allow more time for negotiations.
Although it is not clear what the path is now for the future of Brexit, it is certain that the Pound is likely to be extremely sensitive to whatever the developments may be. The vote is scheduled for 19:00-21:00 this evening, and rumours as to what could happen are likely to have a significant impact on GBP rates throughout the day. Contacting your account manager here ahead of the vote will help you put a plan in place for your upcoming transfer that could help save you thousands of Pounds.
Economic data releases for the Pound are likely to be overshadowed this week owing to Brexit, but December’s inflation data tomorrow could show a slight drop due to falling oil prices at the end of last year and this could weaken the Pound. With the recent pressures hitting the highstreets it is also likely that Friday’s retail sales figures for December will also show a fall.
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