Theresa May defeated the Tory coup last night and is now headed to Brussels to continue seeking concessions. While the prime minister insists her victory gives the Conservatives a ‘renewed mission’, it will surely privately concern her that more than a third of Tory MPs voted against her. In the end, she won with a margin of 200 votes to 117. She had suggested that she would not be the leader of the party at the next general election which may well have persuaded more MPs to side with her. Still, the party is clearly divided. We can all now return to the small matter of getting a Brexit agreement through Parliament.
In keeping with recent times, yesterday was extremely eventful. Of course, the result of the ballot ultimately captured the headlines, but prior to that there was much to focus on. As we were all getting into work, the news came through that Sir Graham Brady, the chair of the 1922 Committee, had received at least 48 letters from Conservative MPs calling for a vote of no confidence in May. There then began a day full of speculation regarding what the outcome would be.
Within two hours, more than 100 Tory MPs had tweeted their support for May, with only around four saying they would vote against her. Of course, by then we knew that at least 48 would vote against her, but the figures were unreliable at best. It is one thing to say you will support May, but another to go through with it. These ballots are secret, so it is up to individuals whether they share their decision with anybody else.
Sterling strengthened following the news, as investors assumed May would survive the confidence vote, thereby reducing the risks of a no-deal Brexit leader. Rightly or wrongly, the markets are strongly against a no-deal Brexit and the pound’s value in the future hinges on whether the UK leaves the EU with or without a deal. As time goes on, it is becoming less about what type of deal and more about that there is a deal.
While all of this was going on, stock markets around the world rallied following reports that China has decided to cut the import duty on American cars from 40% to 15%. The Financial Times has described the news as the first ‘concrete sign’ that the trade war is cooling and the outlook is more optimistic than it has been for some time. Investors are also relieved that Meng Wanzhou, Huawei’s chief financial officer, has been released on bail in Canada.
The pound had a fine day yesterday and was the best-performing major currency. However, it is still only a two-day high and a full five cents below the levels it posted against the dollar in September. Everything is on a knife-edge at the moment and we encourage you to use a forward contract to fix the same exchange rate. Speak to your personal trader on 020 7898 0541 to find out more.