The centerpiece of the day is a historical vote in the British Parliament, where deputies will make their verdict on the proposed deal. Most professionals and currency strategists speak about the high probability of Theresa May being defeated, regardless of particular optimistic signals. According to the currently developed “tradition”, on the eve of a crucial occasion on the market, many reports appeared that frequently opposed each other: some sources said that the most influential members of the Conservative Party chose to support the deal, while other insiders assured reporters the opposite. Considering the whole background of the concern, hesitation still prevails in the market, which, nevertheless, does not avoid the pound from keeping within the 28th figure.
The British currency yesterday got an impulse for its development on two realities. According to many sources, some opponents of Theresa May (amongst the Conservatives) started to question their position, and, therefore, today can vote for the approval of the agreement. This is a parliamentary association of eurosceptics-Conservatives (European Research study Group), which includes nearly 50 deputies. The issue is that there is no combined position among them: even if one of the prominent representatives of this group chose to support the offer, this does not mean that May can rely on the approval of all the others. Nonetheless, the market jumped at such reports, after which the need for British currency increased.
In addition, the pound got some assistance from Brussels, nevertheless, in my opinion – of an extremely dubious nature. The reality is that the European Union sent an open letter to the British parliament yesterday, discussing its method to Brexit’s main unresolved problem – the program for controlling the border in between Ireland and Northern Ireland after the nation’s withdrawal from the Alliance. The letter did not have the main thing – not even a tip of the arrangement of legal assurances to Britain regarding the time frame of the backstop. Brussels limited itself to the phrase that the European Union would not use this routine “beyond the strictly essential period”. This is a rather vague wording, which, among other things, has no legal force. The European Union has when again confirmed that it is ready to extend the transitional period so that the parties could have time to prepare an equally advantageous arrangement on future cooperation.
Yesterday, Theresa Might “provided” the EU’s appeal to the British Parliament and once again tried to convince the deputies that there was no alternative to the proposed deal. In addition, she somewhat tightened her rhetoric, specifying that in the event of a failed vote, Brexit may not occur, and the nation would “fall apart” due to a severe political crisis.
Despite all the above factors, almost everybody in the market is confident that the deal in its existing type will not discover assistance among most of British deputies. We are not discussing the probability of victory/defeat, but the possible scale of today’s defeat. So, according to experts, if the variety of challengers of the offer will exceed 100-120 deputies, the May federal government is likely to resign (as an option– Labour will put to the vote a vote of no confidence in the prime minister). If the variety of opponents fluctuates around 20-50, the government will still have an opportunity to approve the deal during the second vote.
Let me advise you that according to the just recently embraced norm, the Cabinet of Ministers should provide the Parliament with a “plan B” within three days, that is, a new prepare for the country’s exit from the EU. If the deal undergoes considerable modifications, then Brexit will still have to be postponed for numerous months in order for London to collaborate the developments with Brussels. And although May is unconditionally versus holding off the “deadline”, in this case there will be no option – either a chaotic situation or a postponement of the release date. By the way, this is among the most bothersome choices, as the European Union has actually repeatedly stated that it is not set to revise the contract reached and sit down at the negotiating table again.
There are two more scenarios, the execution of which can not be omitted. These are early parliamentary elections and a brand-new referendum. By the way, according to a number of experts, Theresa May herself can start early elections if the deputies do not support the proposed offer en masse. If the prime minister’s proposal is supported by two-thirds of the Parliament, the country enters a brand-new election, while Brexit date will most likely be postponed to a later date (July or September). The “sub-item” of this circumstance is the option of revealing a vote of no self-confidence in the prime minister. Laborites have long been threatening to put this question to the vote – actually last weekend, the celebration leader stated that “this will happen very soon.” Most likely – right after an unsuccessful vote or after disapproval of “Fallback”.
It is worth noting that if the Cabinet of Ministers will be suspicious, then there are also a number of circumstances. Over the next two weeks, the Parliament needs to (or rather, can) express confidence in the alternative structure of the government proposed by the Conservatives (simply put, just the replacement of the prime minister, but not of the cabinet ministers). If this does not occur, then unique elections will be scheduled, which will be held no earlier than in 25 days. The Parliament might “alter its mind” and, within the framework of the aforementioned two weeks, lend self-confidence to the Theresa May federal government – then the prime minister will continue her work. There are more not likely choices: a Conservative minority federal government (however with a various prime minister), a coalition government, or a federal government formed by the Labour Celebration.
Well, in the end-a new referendum. This choice was unconditionally rejected by Theresa May, however if the government is dismissed, her opinion will be advisory in nature. It deserves noting that a duplicated referendum is rather tough to justify from a legal viewpoint: for this, it is required to make modifications to numerous laws simultaneously (on political celebrations, elections, referendum, etc.). In addition, for a brand-new plebiscite, it will need a different piece of legislation, with the written conditions and terms. At the minute, this is the most unlikely alternative, although it can not be left out.
Thus, today for lots of traders there will be a sleepless night. At about 6:00 pm (London time) Theresa May will speak in the British parliament with a “parting word”, followed by conversation and voting for the draft deal. It is hard to say under what circumstance further events will develop – each of the above choices can life.The product has been provided by InstaForex Company – www.instaforex.com