After Theresa May beat a Tory coup and set about seeking assurances from European leaders, the question on everyone’s lips was when was the Commons vote on the May’s Brexit deal going to take place? Towards the end of the day, we received an answer from No 10, when Downing Street said that it will not happen after Christmas, but will come as soon as possible in January. The government has committed to hold it before 21 January 2019.
Still, it currently looks as if it doesn’t matter if the vote is held tomorrow or in one thousand years – Parliament is deeply divided on the issue of the Irish backstop, and 117 Tories voted against her on Wednesday night. As it stands, her best chance of getting the bill passed is by getting the EU 27 to renegotiate. But May has admitted she is not expecting a breakthrough on the deal at the EU summit, and leaders across Europe have ruled out any renegotiation.
The European Central Bank announced that it will stop buying government bonds at the end of this month, some four years after announcing its quantitative easing programme. Since launching the measures, the ECB has purchased €2.6 trillion of bonds to stimulate the economy, with yesterday’s announcement merely confirming what had previously been outlined. However, it is interesting to consider that the move comes even as the Bank cut its growth forecasts for this year and 2019.
Sterling moves were fairly subdued throughout the day as traders come to terms with the roller coaster few days we have just had. The pound was above $1.26 throughout the day and while it almost touched $1.27 at one point, it soon fell back. It ended around 1.5 cents above where it was on 11 December, but just one month ago, it was worth 3.5 cents more than it is at present.
The road ahead looks rather bumpy too, hence our passion for communicating the benefits of locking in a single exchange rate. It is a point worth labouring: if you use a forward contract to lock in an exchange rate, you can save yourself from scrambling to find thousands of pounds at the last minute. In the last twelve months, without fixing a rate, you could have found yourself looking for almost an extra £10,000 for a £200,000 purchase. Speak to your Personal Trader on 020 7898 0541 to find out more.
Finally, despite the fact that Theresa May has delayed the Brexit vote until January 2019, it is still worth taking a look at some of the possible outcomes. Importantly, we outline what we believe might happen to the value of sterling under each scenario. The pound will almost certainly rally if the bill passes Parliament, but as we should all know by now – that is extremely unlikely as it stands. Hence our enthusiasm for UK SMEs to take steps to protect their business sooner rather than later.