Now we’ve had time to read reaction to the Chequers deal, what will happen to the pound at the open?
Theresa May securing and agreement for her Brexit blueprint saw a late bid come into the pound. Since then, news has ben mixed. There’s still been plenty of backing but some of the backbench hardliners seem less than happy with the plan. Some have even suggested they will call for a vote of confidence in Theresa May. On that front, we’ve been here before and it’s led to nothing. On reading around, I get the sense that those calls are small and in the minority at the moment.
However, May will be briefing the backbenchers and other members of her party tomorrow so we may have to wait for that before really seeing how people think.
May was always walking a fine line between remainers and leavers in her party and she will never be able to please both sides equally. It’s more a case of pissing off one side as least as possible and she’ll be aiming to appease the hardline leavers tomorrow.
On top of all that, we haven’t even started hearing from the EU properly yet. Again, early indications in the press suggest that May’s plan is going to face some respectful scrutiny but will likely be kncoked back initially. What’s likely to happen is that it will be seen as a basis and start off negotiations moving forward.
Putting it all together, I think we could see the pound open around, or not far from, Friday’s levels, and I don’t think we see any big gaps, and certainly not outside of recent ranges. Given the backbench threats, there’s perhaps a case to suggest we see a softer open. But, as we know from trading, be prepared for anything. Moving forward into Monday, we’ll be back to the usual headline risk from both May’s next meeting with ministers, and whatever EU bods pop up with their 10 cents worth.
I’ll be staying out of any moves at the open tonight and will see what the prices say at the London open.