Sterling has spiked against the euro, hitting a 22-month high as Prime Minister Theresa May secures legally binding changes to the backstop. The Prime Minister flew out to Strasbourg yesterday evening to meet European Commission President Jean-Claude Junker, which saw the pound strengthen after a pitiful weekend.
These assurances include a ‘legally binding instrument’ that will allow the UK to formally challenge the EU if it tried to keep the backstop indefinitely, as well as a joint statement that commits to replace the backstop by December 2020.
It will be interesting to see if Theresa May has done enough to get her deal through Parliament, with the second ‘meaningful’ vote taking place this evening. Reactions to the backstop agreement have been mixed at best, with the DUP saying that they will “carefully study” the assurances before voting. It’s also likely that Attorney General Geoffrey Cox’s legal opinion will have some influence on how MP’s vote.
Later this morning, GDP results for January will be released. After the economy ended 2018 in a weak position, the results will reveal if the start of 2019 brought any recovery. The pound may react to these results, but it’s likely that the outcome of the second ‘meaningful’ vote will have a greater impact.