Brexit update 17 October 2019
We’re over one fence regarding the UK and EU negotiations so what comes next? Well, I say we’re over the fence but as the DUP are still against the deal, we’re sort of over the but with one leg still caught on the wire.
We now switch Brexit to UK parliament and this is the next huge step. Now, there’s going to be a lot of number crunching going on as to which MP’s will back the deal and which won’t. There’s been a persistent numbers game played throughout all this but I think that it’s all going to count for nothing. Here’s why.
The number crunchers have the yay’s and nay’s on their lists but what those lists don’t, and can’t, factor in is the emotional aspect. Voting against May’s deal was a purely political move back in March and MP’s have seen the damage that has done, both in how the country has reacted and how their own colleagues have reacted. They now have the opportunity to end all this once and for all, so for many, it’s now a decision between their own self-interests or finally putting Brexit to bed. For the hardliners, this might not change anything but there will be some doing a lot of hard thinking. This burden will also weigh on the marginal voters who might have been happy playing politics last time but will not be so keen this time. So, the touted numbers game is flawed because of the magnitude of this decision.
Now, the DUP remain a huge consideration because their opinion matters for two reasons.
- This whole negotiation has been about them and the backstop so if they back it, other MP’s are going to struggle to argue against their view. Not only are they a vote numeric for Boris but they can swing the vote for others.
- Boris could still pass the deal in Parliament without the DUP but it would be a huge longshot trying to swing the marginals, and opposition parties will use the DUP refusal to back the deal as their ammunition to vote it down.
If I had to call it, I’d say if the DUP get onboard between now and Saturday, the deal will pass, and likely by more than many expect. If they don’t, it’s likely it won’t pass.
For GBP, we have a monumental gap risk this weekend so trying to make sure you’ve got any GBP exposure covered this weekend is going to be paramount. Expect brokers to ramp up margins over the coming hours too, so factor that into your thinking.
This is a yet another monumental moment for Brexit and GBP, and that can’t be underestimated. We cannot rule out the DUP getting onboard and Parliament still screwing it up, as we’ve seen many times already. Anything can happen.
For now, here’s the updated beer-mat GBP range analysis.
- A huge week is coming in FX markets – Are you ready for it? - September 26, 2020
- Did you all have fun in GBPUSD last week? - September 14, 2020
- GBPUSD is back on the Brexit wagon. Here’s the levels we’re watching - September 7, 2020