Yesterday, Theresa May announced her plan B for Brexit following last week’s Commons defeat. During the speech, the Prime Minister said she expects MPs to reject calls for a second referendum, saying it would undermine trust in politics. The irony of that statement will surely not be lost in some. She went on to say that she wanted MPs to clarify exactly what they want on the backdrop, adding that she will not reopen the Good Friday agreement. Other key points included her saying she wanted MPs to have more say on future UK-EU deals and that the £65 fee for EU nationals applying for settled status will be abolished. She also refused to rule out extending article 50.
Earlier, Downing Street said it is likely Parliament will have no second vote on Theresa May’s Brexit deal until February, thereby downplaying the significance of the vote held on 29 January. A spokesman for the prime minister said that next week’s vote was now ‘a second meaningful vote’ and the government’s motion would not give details of May’s plan to get an agreement through Parliament. With just 66 days until Brexit, time is running out for all concerned.
However, the decision of when to hold the next meaningful vote might well be taken from May’s hands, as MPs could attempt to amend the motion next week, which would set a specific date. On a day unsurprisingly full of Brexit-related news, Labour MP Yvette Cooper, said that much of the government, including Theresa May, privately want to rule out a no-deal Brexit, but cannot explicitly call for it because of party politics. One person who certainly does not want a no-deal Brexit is Richard Harrington, the business minister, who said exiting the EU without a deal would be an ‘absolute disaster’. He has previously said he will resign from the government if May opts for a no-deal.
In its latest economic outlook, the International Monetary Fund said that a no-deal Brexit and a sharper slowdown in China are the biggest risks to growth in the global economy in 2019. The report came on the same day we learned that China’s economy grew 6.6% in 2018 – the slowest pace in 28 years. It is clear that the world’s second largest economy is slowing down, with growth at 6.4% in the fourth quarter, levels not seen since the height of the global financial crisis. The figures might serve as encouragement to reach a deal with America to end the trade war sooner rather than later.
The pound had a bit of a topsy turvy day, weakening in the morning as investors expected no substantial developments in May’s plan B. It was volatile throughout the day, with a day range of $1.2831 – $1.2912. It was a similar story against the euro and as it stands, it appears traders think the prospect of a no deal are comparatively low, but there is still much uncertainty regarding what the outcome of the negotiations will be.
With so much volatility on the horizon, make sure you speak to your Personal Trader today about how to use a forward contract to lock in your exchange rate. Call them on 020 7898 0541.