Brexit – May Pulls the Plug on a Disaster Waiting to Happen…

Economic data out of the UK this morning failed to impress, but of greater significance was the harsh reality of what lies ahead for British Prime Minister Theresa May, the Brexiteers and really, the face of British politics that was once within the higher echelons of the G20.

Unsurprisingly, with an overwhelming majority going against the British PM ahead of tomorrow’s vote, there was an unprecedented decision to call off a parliamentary vote on the future of Britain.

Going into December, the general concern was that the EU and Britain would fail to find common ground, but in the end the EU Establishment was the least of Theresa May’s concern. Rebels within the Tory Party and the opposition were set and ready to bring down the house.

For all the faults that have been assigned to the current government, the decision to pull the plug today and attempt an impossible is an impressive one, particularly when considering the antagonism throughout the negotiation process.

For a Prime Minister mandated with getting the best for Britain, the decision to pull the plug must be considered a positive, a willingness to hear the cries of foul an attribute that many world leaders fail to hear, but the reality remains that, for the Britain and the economy, the uncertainty has just been exasperated.

So, the UK parliamentary vote has been delayed and, while there is some talk of a January vote, it’s up in the air and one thing the market doesn’t like is uncertainty.

We have a week until the EU Summit and how member states respond to the British PM’s decision to pull the plug on tomorrow’s vote will be key. Some may well seize on the opportunity to rattle the Pound and the Brits in an attempt to safeguard EU sovereignty.

Expect the opposition parties to amass united to attempt a vote of no confidence and assume that there will be some rhetoric from Brussels. It’s a big call to think that there is a better deal…

Shooting the messenger will be Jeremy Corbyn’s mandate for now, but it could end in tears for the Labour Party leader should he pursue this near term attack. Few if any were capable of delivering a deal and it could go the other way if the EU empathises with Theresa May and opens dialogue for a better deal.

Let’s face it, the UK economy is not a small one and the EU needs all the support it can get right now…

Unsurprisingly, the Pound hit more than a speed bump, sliding to as low as $1.2507 before steadying, the margin calls on the way down an exasperation of a trading environment not too dissimilar to the EU Referendum itself where many believed the vote would be to stay.

At the time of writing, Cable was down 1.25% to $1.2570.

This article was originally posted on FX Empire

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