How to trade another defining moment in Brexit
Here we are again at another big point in the Brexit saga. It looks like we’re finally going to get the meaningful vote but never rule out anything in this soap opera. As usual, the politicians are still fighting tooth and nail to push their own agenda’s, rather than uphold the result of the Brexit vote. It’s absolutely true that these clowns risk destabilising the whole political landscape for voters if they don’t follow up on Brexit. Speaking to a lot of people (remainers and leavers alike), upholding the will of the majority has become more important than Brexit itself.
Theresa may has said as much too in extracts of her speech due to be given in Stoke today. As we’ve got the main points from the speech, it shouldn’t be a major event but there’s still some risk.
We’re also supposed to be getting some communication from the EU regarding further assurances. We’ve already had reports that we could get that before 12.00 GMT but the question is whether it offers anything substantial. As reported a few minutes ago, it might not be offering much at all.
In today’s EU letter of assurances on #Brexit deal, the real message to MPs to help Theresa May is the EUs insistance that -as PM claims- this deal is the ONLY deal on offer. The content of the letter: reassurances on the backstop etc we’ve (often) heard from Brussels before 1
— katya adler (@BBCkatyaadler) January 14, 2019
If the actual letter is just repeating the “willingness” to make sure the backstop is temporary and nothing more concrete, expect GBP to take that badly. In fact, if you click that tweet above, there’s a thread and it already seems likely that we’re not going to get anything bullish for the pound.
To the vote itself, and May is obviously expected to lose, and lose it badly. The market is expecting that so the bigger price risk comes if she doesn’t lose by as much expected. The general consensus is that May will lose by triple figures so really anything less than 100 could weirdly be seen as good news by GBP. The scale is what counts. The less May loses by, the less minds she has to change and the more some of those who voted against her might waver. As big a vote as this is, it can be used as a protest vote by some, which might hide some MP’s real intentions. Any second vote will be the real clincher. I still believe that when it is a definitive vote, many of those who are against the deal now, will fold when it comes to the crunch and this vote isn’t that crunch.
As usual there’s threats and counter threats from opposition parties for if the vote fails. Labour has said they’re likely to call a vote of no-confidence in the government and for new elections but they will wait and see how the vote goes. And, just to show how screwed up this thing is, some of the rebel leavers that tried the no-confidence vote in Theresa May might now actually be voting for May’s deal just because it goes against the remainers and opposition parties.
One other big risk is the unknowns, and that’s whatever schemes and sub-plots might be pulled out of the hat before the vote. We saw one such thing cause a storm last week with the Grieve amendment, and we should be ready for more of the same. If you remember the last time we should have had the meaningful vote, it turned into something completely different with the vote being cancelled and then the no-confidence vote in May.
One other piece of the puzzle to focus on will be whether the Brexit date gets changed. This can be seen in two ways for GBP.
- Good if a deal gets agreed and passed in the UK, and it’s just a procedural move to give enough time for both sides to get the details nailed down
- Bad if it’s an extension because we’re still at an impasse and thus facing more weeks of stalemates and political arguing
Although May has been steadfast over the March 29th exit date, she will extend it if it’s in her best interests to do so.
From now until the vote tomorrow, it could be very hairy in GBP pairs. This is a dangerous time and because of the even greater risk to GBP now, I’m not overly interested in getting involved. I certainly have no interest in positioning myself in any way ahead of tomorrow. Unless there is clear and substantial news to jump on, I’m going to keep my money safe and sit back and watch. For me, trading the next two days is tantamount to gambling and if I want to gamble I’ll go to a casino or down the bookies. By all means trade the intraday moves and levels but beware the heightened headline risk. Keep your stops tight and be ready to bail if things turn sour.
Anything could happen in the next couple of days. We could just as easily be trading 1.35 as we could be pushing 1.20. This isn’t a time to be brave, this is a time to be sensible.
Trade safe and good luck.
Latest posts by Ryan Littlestone (see all)
- The market is ramping up the Fed cut expectations - March 22, 2019
- Forex options expiries 22 March 2019 - March 22, 2019
- Another winner banked from the ForexFlow Platform Live trading room - March 21, 2019