A Volatile Week Ahead for GBP Buyers and Sellers

On Tuesday the 12th Theresa May will present her deal and a meaningful vote will take place.

There is little suggestion that the discussions between London and Brussels on the Northern Ireland backstop will resolve an outcome, therefore there is a real possibility that we could see a majority of MPs in the UK Parliament back the Withdrawal Agreement during Tuesday's 'meaningful' vote.

If the Withdrawal Agreement is rejected on Tuesday, the next vote will take place on Wednesday. Parliament will vote on whether to leave the EU without a deal. If unsuccessful then Parliament will vote again on Thursday 14th whether to extend Article 50 and therefore delay Brexit. If successful, the UK will enter an extension on the deadline, if unsuccessful the UK will leave the EU with a no deal scenario.

There is still plenty of doubt on what the outcome will be, while MP's may not be on board with the withdrawal agreement, it is proving to be the best deal on the table for the type of exit deal they desire.  The general opinion is that a no Brexit hard deal is to be avoided, therefore we could see more support for a softer Brexit during any extension, that would see the UK maintain close alignment with the EU Customs Union - This would also reduce the need for the Irish backstop and a hard boarder.

There is of course still the possibility of another referendum if MP's and Parliament cannot agree, however this is considered to be unlikely at this stage.

This will naturally be a very volatile week for sterling. Leading up to Tuesday and the outcome of the votes will determine the direction of where sterling will head. If a deal is agreed sterling should rise, if the UK leave without a deal sterling may lose ground quite dramatically, if there is an extension then we anticipate sterling will gain.

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