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Reaction to UK PM May losing her Brexit vote


Theresa May has lost the vote in Parliament. The key to what happens next is the size of the defeat. Mrs May has lost by 230 votes in an astoundingly large defeat (202 voting for the deal, versus 432 against).

Brexit question what next

Political impact of what happens next

Well although Mrs May’s deal is now dead in the water and she has lost in one of the largest defeats of a government on record, she will battle on. However, the Conservative Government will also now face a vote of no confidence after the Labour Party tabled the motion almost instantly. This confidence vote will be faced tomorrow night at 1900GMT.

What is interesting is that sterling has rallied on this stunning defeat. This would suggest that there is expectation that first of all, the Conservative Government will not lose this vote of confidence, but secondly the way is open for a softer form of Brexit and/or an extension of Article 50. Given the size of the defeat, there would need to be some considerable changes to the EU Withdrawal Agreement currently on the table, Mrs May will struggle to get the concessions from the EU. The EU have already ruled out re-opening the agreement via a special summit this weekend. Therefore there will need to negotiate a new deal for Brexit and surely that would mean the need to extend Article 50.

 

Market reaction has been actually to be sterling positive. Sterling has fallen steadily throughout today but has rallied on this result. This comes as the political landscape is shifting quickly and as laid out above this will surely mean a softer Brexit, whih is sterling positive.

  • GBP/USD has jumped over 120 pips since the vote result was announced. On the assumption that The Government does not lose the confidence vote, Cable should be set for a recovery back above $1.3000 in the coming days.
  • EUR/GBP has fallen over 50 pips and similarly could now be set to test below £0.8800 and towards £0.8700 in the coming days.


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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.