Oh dear. Last night, Theresa May suffered the heaviest Parliamentary defeat of any British Prime Minister in the democratic era. MPs rejected her Brexit deal by a majority of 230 which was arguably worse than even she might have expected. Jeremy Corbyn said he will table a no-confidence motion in the government, which will be voted on at 7pm tonight. May has the backing of the DUP and Tory MPs so she will likely win that vote, but it does raise the question of what will happen next. There will be increased pressure on Labour to support a second referendum and it is believed that Conservative MP Dominic Grieve will present two bills to the House which call for a people’s vote.
Remarkably, the pound actually strengthened following the result of the vote. This flew in the face of what pretty much everyone expected to happen and while it is reasonable to expect continued volatility throughout this week and beyond, it helps cement the fact that you never can tell what is going to happen. May’s defeat could prove to be a victory for those hoping for a no-deal Brexit or those hoping for no Brexit. The City clearly isn’t sure whether the result is good or bad news for the UK, with movements this morning rather muted. Importantly, there is no consensus over the impact of the result and until there is, there won’t be any big movements in either direction.
As for May, she will begin cross-party talks this morning with a view to agreeing a new approach. As the PM pointed out in the Commons yesterday: “It is clear that the house does not support this deal, but tonight’s vote tells us nothing about what it does support.” She will be hoping to find out sooner rather than later.
Following May’s Parliamentary defeat, the European Council President, Donald Tusk, sent a Tweet that was a thinly veiled call for the UK to remain in the EU. Jean-Claude Juncker, the European Commission President, asked for clarity from the British government as soon as possible, while Emmanuel Macron said that the EU might make one or two improvements, but he didn’t really think so. It’s all a bit of a mess at present and it is extremely difficult to predict what will happen next.
That is one of the chief reasons we encourage our clients to forget about second guessing the markets and instead protect your money with a forward contract. Speak to your Personal Trader on 020 7898 0541 now about how a forward contract will lock in your exchange rate for 12 months.