Brexit – Control Doesn’t Mean Progress

The Wednesday Stalemate

A total of 8 Brexit options were presented to parliament for a vote on Wednesday. Unsurprisingly, none received a majority vote to solve the Brexit puzzle that has plagued British politics for over 2-years.

Following the UK Parliament’s Monday vote in favor of seizing the Brexit process, some had hoped for an orderly resolution to the problem.

Too many options and too many differing opinions ultimately led to failure. We had discussed the issue of support at the beginning of the week. If Theresa May was unable to get the necessary support from the Conservative Party-led coalition, what chance did Parliament really have?

Theresa May did offer her resignation in exchange for her deal being pushed through. It remains to be seen, however, whether the Tory rebels and the DUP provide support. Tory rebels and the DUP failed to acknowledge support ahead of the Wednesday votes, suggesting that the deal is off the table.

During Wednesday’s session, a 272 – 264 vote against Britain staying within the customs union after Brexit was the narrowest loss from the 8.

What’s next?

While Theresa May’s offer fell on deaf ears on Wednesday, there will likely be a concerted effort through the day to garner the necessary support of her deal.

Getting the DUP onside will be the biggest challenge. The Irish backstop has continued to be the stumbling block for the British PM and the DUP’s reservations over the deal have left the PM isolated. A parliamentary version of Brexit would certainly undermine the Conservative-led coalition party’s status in Parliament.

First up will have to be a resolution to the ongoing impasse. Failure to find a resolution by mid-April and Britain will be stumbling out of the EU without a deal.

Expect some hold back by many MPs on a final decision on whether to support Theresa May until there is some clarity on what the shorted list for next week will be. One can only assume that remaining within the customs union will be amongst them.

Out of the 149 votes that went against Theresa May earlier in the month, 75 were conservative party rebels and 10 were from the DUB.

For Theresa May to get her deal over the line, she would need the entire 75 tory rebels to reverse their previous vote. News hitting the wires in the early hours suggests that this is unlikely. A number of MPs have said that they would align with the DUP, all of whom are against Theresa May’s deal.

Theresa May will likely have until tomorrow after which time, Parliament will schedule Monday’s session and alternatives to vote on.

Based on the result on Wednesday, there will likely be 3 alternatives for MPs to vote on next week:

• Second Referendum: Received the largest number of votes on Wednesday, totaling 268.
• Remain within the customs union: Saw the narrowest margin of defeat. (272 against/264 for).
• Labour Party Alternative: Received the 3^rd largest support (307 against/237 for).

Clouding the muddy waters with a 4^th would likely raise concerns that the impasse would continue.

The Pound

There was plenty of volatility, as had been widely anticipated. Through late Wednesday, the Pound slid from an intraday high $1.32693 to an intraday low $0.31423. The slide came in response to Parliament’s failings, as the chances of a no deal departure increased.

Support through the early part of the day came on hopes of a resolution next week. One of a possible 3 Brexit alternative options could get across the line. This is, of course, on the assumption that the British PM fails to turn 75 rebels.

For the day ahead, Theresa May’s success or lack of will be the key driver for the Pound. A Theresa May deal is better than a no-deal afternoon.

At the time of writing, the Pound was up 0.03% to $1.31916. A bullish start to the day saw the Pound rise to an early high $1.32079 before easing back.