More Brexit Votes
The British Parliament is voting again tonight on Brexit, possible the most overcooked and tedious political saga of all time. It is important for non-British observers to understand this basic fact: the British government went to the people with a referendum designed to achieve a “rubber stamp” to silence the growing campaign for Britain to leave the European Union, confident it couldn’t possibly lose. Shockingly, the public narrowly voted to leave the European Union, and ever since, a large proportion of Britain’s elected representatives have been trying to stop the result of the vote being implemented. This is possible because the result of the vote was not legally binding. So, while it may look like incompetence, there is a fundamental political struggle going which splits the country right down the middle.
The current legal position is that Britain will leave the European Union on 29th March with no deal. Tonight, the British Parliament will be voting on several proposals by legislators which seek to either delay (and ultimately overturn) Brexit well beyond 29th March, rule out a “no deal” exit, or to accept in principle a deal somewhat different from what the European Union has already offered in the hope that the European Union will backtrack.
The situation is extremely fluid and confusing, but it is important to be aware that the result of tonight’s votes, which are likely to be narrow, could produce sharp and strong movements in the value of the British Pound. My latest information is that the amendment to delay Brexit if Parliament cannot ratify a deal with the European Union currently hangs in the balance by just a few votes, and if it were to pass, we would be likely to see GBP/USD rise perhaps as high as 1.3350. Note that we have a bullish long-term trend in the Pound which is partially driven by a growing feeling that Brexit may not happen at all, so this would be an “accident along the line of least resistance” if it were to happen.