Sterling continues to grab the headlines, with the rapidly evolving domestic political situation driving the currency higher. Prime Minister May, in a significant u-turn, today announced that if the House of Commons once again voted against her draft Brexit deal – in a vote scheduled for 12th March – parliament would then be given a chance to vote on 13th March on whether the UK should leave the EU without a deal on 29th March. Should the House of Commons vote against this, it would then vote on 14th March on whether to seek a 3-month extension to the Article 50 negotiations in order to delay the UK’s departure from the EU to end-June 2019.
Moreover, Jeremy Corbyn, the leader of the main opposition party, officially declared yesterday that his party would support a second referendum in the event that its own version of a Brexit deal, which includes membership of the Customs Union, was rejected by parliament. In any case, the Labour Party leadership is pushing for the British electorate to have a final say, even if the House of Commons approves Prime Minister May’s deal on 12th March.
While there is still a great deal of uncertainty in weeks ahead, markets are seemingly assuming that a damaging no-deal Brexit is now pretty much off the table while the odds of the UK remaining in the EU have gone up. The GBP/USD and GBP/EUR crosses temporarily rallied past, respectively, 1.32 (4-week high) and 1.16 (10-month high).
