- UK PM offers MPs a vote on extending Brexti deadline
- Vote will occure should her "meaningful vote be rejected"
- EURGBP drops to lowest level since May 2017
Prime Minister Theresa May has opened the door for a delay to Brexit by telling House of Commons that should they fail to approve her new re-worked deal next month. The move represents a significant climbdown from her previous stance and is really an admittance that the strategy of hoping to force parliament to choose between her deal and no-deal due to time pressures has been abandoned.
From a political point of view, it’s a smart move as it heads off the perceived threat of resignations from around a dozen pro-EU ministers, including cabinet members, several of who reportedly oppose a no-deal Brexit so vehemently that they would have quit had she not altered her course. Furthermore, lawmakers are set to vote on an amendment (Cooper-Letwin) tomorrow that if passed would essentially, lead to the same outcome in seeking an extension of the Article 50 deadline beyond 29th March, so in effect May has given in to this before the vote.
EURGBP has dropped below the 0.8620 level to trade at a 21-month low today. This could be seen as a singificant break below key support and if it sticks then it opens up the possibility of a significant move lower. Source: xStation
The markets clearly see this as a significant step that goes some way to taking no-deal off the table, even if the PM was at pains to stress that this isn’t the case. Markets remain well supported with the pound remaining close to its highest level of the month against the US dollar, while you have to go all the way back to May 2017 to find a higher Pound/Euro exchange rate. While there still remains a fair amount of work to be done before a deal can be finally agreed, the belief that the worst case scenario will now be avoided is seen as a clear positive for the pound and this has underpinned the gains seen in the currency of late.