Brexit – Can Theresa May and Jeremy Corbyn Break the Deadlock?

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Overnight, European Council President Donald Tusk suggested that Britain go for a 12-month flexi-extension to its departure date from the EU.

A flexi extension would give the British government sufficient time to agree on a deal while removing the need to remain in the EU should a deal be agreed ahead of a Brexit extension deadline.

The offer, which would need EU member states to vote in favor of next Wednesday, comes as Theresa May acknowledged that a further extension would be needed for Britain to avoid a disorderly departure from the EU.

Theresa May will want a deal in place ahead of the EU’s 10th April deadline. For the British Prime Minister, avoiding involvement in the EU Parliamentary elections next month is key.

Britain would need to put forward EU parliamentary candidates should an extension go beyond 23^rd May.

Extended talks between Tory Party MPs and the Labour Party on Wednesday and Thursday failed to deliver a solution. Members from both sides stated that talks were productive. Getting over the finishing line, however, may be an altogether different proposition.

The Day Ahead

Prime Minister Theresa May is facing a number of issues as the 10^th April deadline rapidly approaches.

The House of Lords will vote on Wednesday’s no-deal prevention legislation on Monday, 8^th April.

There is no guarantee that the House of Lords will support the draft legislation in its current form. With a deadline of 10^th April, talks between the Tories and Labour Party will need to deliver a favorable outcome. This would nullify any uncertainty over the House of Lords vote on Monday.

Of interest will also be whether Theresa May will have to agree to a second referendum.

Having come this far, one last confirmatory referendum does make some sense. The issue will be the timing of a Referendum. Can a 2nd referendum be wrapped up ahead of the EU elections?

As things stand, the House of Lords and EU member states will need to agree to the latest extension request. If cross-party talks fail to deliver, the chances of a no-deal departure from the EU next Friday will see a significant rise.

The Pound

At the time of writing, the Pound was up by 0.22% to $1.30962.

There were a few raised eyebrows when Theresa May reached out to Jeremy Corbyn for cross-party talks. If the movements in the Pound are anything to go by, the reach out certainly eased market fears of a no-deal Brexit event next week.

Today’s session will likely be another long one following Thursday’s marathon session. A resolution to the deadlock could see the Pound return to $1.35 levels. Failure and $1.28 levels wouldn’t be an unreasonable starting point.