Home » Currency Note » Currency Note » Currency Note GBP » GBP: Theresa May’s Brexit plan rejected

Last night, the British prime minister suffered the worst Parliamentary defeat of the democratic era. In December, May had postponed the vote as she faced a humiliating defeat, but since then there has been virtually no improvements to the original proposals and, as expected, she was crushed in the Commons. It is arguably more embarrassing than it would have been had she not postponed the original vote and it certainly gives the UK less time to find a way out of this mess.

Unless article 50 is extended of course and some MPs have said they are assuming that this will have to happen to move forward. May faces a confidence vote tonight and although she is expected to win, it will put further pressure on her and the government as a whole. Dominic Grieve will table two bills today that call for a people’s vote. We might yet have a second referendum which could have the effect of deepening divisions in this country.

The pound actually moved higher against the euro and dollar following the result, as traders tried to work out whether the news was good or bad. Admittedly, the moves were fairly muted and we can certainly expect more dramatic moves once the future direction of the UK is known.

There were no economic data releases from the UK yesterday, which was just as well given the vote on Theresa May’s Brexit plans, but today picks up a little. We will see December’s inflation rate, which is expected to fall to 2.1% from 2.3% the previous month, as well as the retail price index for last month. The Bank of England governor, Mark Carney is also set to deliver a speech this morning and it will be interesting to see what he has to say about last night’s result.

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