Summary:
- UK Parliament vote in favour of Article 50 extension
- EU acceptance far from a given
- GBPUSD remains towards upper reaches of recent range
It’s been a fairly steady morning on the whole for UK stocks markets and the pound, with the markets seemingly consolidating after a frantic few days. While Brexit is never far from the front of mind these days there appears to be a little bit of respite at present as we build up to next week’s EU summit. Parliament passed a bill last night by the narrowest of margins which effectively forces Theresa May to seek a Brexit delay, in what is seen as a step away from a no-deal outcome. However, the belief that the EU will readily accept this proposal is highly presumptuous as it would necessitate the UK participating in the upcoming EU elections - something the bloc is strongly opposed to happening if the UK still pursues Brexit.
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The pound is little changed against many of its peers today with the market pausing after recent gains. Source: xStation
EU acceptance far from a given
From Europe’s point of view, this would mean Brexit dominating the democratic process with UK representatives likely to be opposed to remaining in the bloc while also threatening to stir up anti-EU sentiment in other member states once more. Should the EU fail to agree to an extension, then the UK would be stuck with a choice between a no-deal Brexit and revoking Article 50 - something which not only would be highly controversial but may actually be impossible to achieve in haste due to the necessary legal process. For all the positive rhetoric the chances of a no-deal outcome still remains in the words of BoE Governor Mark Carney “alarmingly high” and the potential risk this poses to the pound should not be overlooked.
GBPUSD remains near recent highs with 1.3195 offering resistance and 1.3120 possible support. Source: xStation
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