After months of wrangling between Prime Minister Theresa May’s negotiating team and the European Union, a vote on the Brexit plan was due in Britain’s parliament tomorrow. When it was clear that even May’s own party would refuse to back the plan, she postponed the vote at the last moment leading to further Monday morning market turmoil.
There appear to be three or four potential next developments.
1. The ECJ, the highest court in the European Union, found that Britain could unilaterally decide to stay in the “Club” without needing further action or approval from any other members. This would overturn the entire Brexit referendum. It is not yet clear what legislative steps would follow or who would call the shots on getting approval for this outcome. But late in the day, Prime Minister May rejected the Article 50 option.
2. Theresa May will likely return to the EU to see if there are any sweeteners that negotiators on the other side can offer to placate the No Votes in Parliament. Most are reporting this is not going to achieve any positive result, as the EU has clearly tired of the British backing and filling.
3. There could soon be a vote of no confidence in the British government, after which a new Prime Minister would be chosen. Unclear how anyone else could change the outcome of a vote on the current plan, but it is pretty clear that support for May from all sides is evaporating.
4. The March deadline for a decision passes with no vote and no clear decision. Stalemate. Chaos reigns. Beginning to sound a bit like the Greek bankruptcy debacle of a couple years back.
Are there any possible optimistic outcomes? I’m afraid at this point…. not so much. As we look forward to the next weeks of bickering and back and forth, one thing is certain: there will be volatility in the British currency pairs. Check out a chart of the Pound versus the U.S. Dollar in the Monday morning trade as hint of what’s to come!
We also posted a video of the Pound versus U.S. Dollar price action with the Zeelander System overlay on Twitter this morning. Click here to see how the overnight trade developed into a 100 pip opportunity to the downside. Remember, always take a self-disciplined trade! And keep your eyes wide open for news, rumors and fundamental announcements.
FxFortuneHunters, let’s get some pips.
