According to the Chief Negotiator, the European Union is united in its thoughts surrounding the current Brexit plans. MPs voted with a majority of 17 in favour of making amendments to the Irish backstop, but since then Barnier and others have claimed that they will keep the current agreement in place. The Brady amendment clearly has the most significance in terms of MPs and calls for alternatives to be discussed, but it still does not provide an answer as to what may happen, simply that Theresa May will need to improve the terms.
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Theresa May will have to return to the House of Commons by 13th February in order to give MPs another chance at voting her deal through, after she's met with European leaders in the near future.
This means that the likelihood of a no deal Brexit is increasing and we are now less than 2 months from the date the UK is due to leave the European Union on 29th March. Indeed, the amendment proposed by Yvette Cooper was rejected and this has caused the Pound to take a wobble against a number of different currencies as it suggests that the possibility of a no deal Brexit is still on the table.
Meanwhile, the head of the Confederation of British Industry Carolyn Fairbairn has said ‘I don’t think there will be a single business this morning who is stopping or halting their no-deal planning as a result of what happened.’ Clearly, very few people want to have a no-deal Brexit but with time running down could this be a real possibility?
Labour leader Jeremy Corbyn has finally decided to drop his opposition to the Prime Minister and join talks to try and improve things but is his input too little too late?
We end this week with Friday’s economic data due out including Markit Manufacturing PMI data for January as well as UK Mortgage Approvals. UK manufacturing data has been improving recently if we have another strong data release this could give the Pound some support. However, at the same time Mortgage Approvals have been rather mixed in recent times so we can expect some volatility on early Friday morning.
What is clear is that although economic data will always have an impact on Sterling exchange rates, the main influence is likely to come from the ongoing Brexit talks so make sure you keep in close contact with your account manager.