Brexit: is there any exit Exit

  • And
  • +A

“Tuesday will be a final vote on a Brexit in the house of Parliament.” We were convinced yesterday. But something went wrong and the Prime Minister of Britain, Theresa may, has postponed a final vote on the draft indefinitely. The reason is simple: she understood that the document, in the form in which it is, will not be accepted. Will have to work again to talk with the European Union, as well as to advertise the existing paragraphs before the House of Commons within a few days, maybe more.
All these discussions, of course, have a direct effect on the value of the British assets, as it will allow market participants to make assumptions about the date and results of the final vote. The heat, the markets started yesterday, when the pound dipped to 20-month lows, and “polynosic” hindsight optimists from the market.
Waiting for the final results, you should pay attention to the following points.
First of all, if the Parliament will abandon the current transaction, it may be even more significant pressure on the pound. In this case, the term will be the withdrawal of Britain from the EU “no transaction”. Ie, the country will lose not only a powerful Executive behind on the world stage, in the form of the European Union, but will not receive as a result of its disconnection no benefits. Learning to live in the new reality will have to re-constantly testing the boundaries of what is permissible – and indeed labeling them for yourself.
Of course, markets such alignment is not satisfied: it is an extremely negative scenario for the pound, which is already ready to lose all its attractiveness for investors. Yesterday, the pound pushed up to 0.9080 EURGBP, and GBPUSD – to 1.2500.
If the House of Commons will be against approved by the EU Brexit plan, the government will have 21 days to propose a new plan, and Theresa may will be able to make changes to it. By the way, the chair under the Prime Minister already does not falter: it is, actually, no.
Decisions have to be made “standing” or “on the run”: have handpicked candidate, ready to shift, may in this post. However, the United Kingdom believes it is Teresa responsible for Brexit, but because not calm down until she will bring the matter to the end.
If the House of Commons, on the contrary, will be ready to make an exit plan, it will help the pound to recover position, as well as to recover some of the losses in the stock market.
With the adopted plan, or without a date for the withdrawal of Britain from the EU will be March 29, 2019. If there is an agreement with the EU, Britain will have a transition period until the end of 2020, during which will continue the status quo of many laws and regulations. Without an agreement with the EU, will not be a transition period, that is the situation for businesses and citizens will change immediately and dramatically. That is why the markets are so afraid of Brexit without a deal with the EU.
We will remind, with what all has begun. A referendum on Brexit took place on 23 June 2016, when 52% of Britons voted for the withdrawal of Britain from the EU. This event GBPUSD has fallen off 7% in one day, and of the oscillation amplitude reached 12%.
The upcoming vote are likely to cause less volatility, but, nevertheless, able to influence the course of trading and to cause a change of the leverage, and to trigger stop-outs and margin Cola traders with positions in pairs with GBP and UK stocks.
____________
Alexander Kuptsikevich,
Analyst
FxPro