The Brexit countdown clock ticks ever closer to deadline but as yet every potential outcome is still possible. We look at the latest standings. The outlook for the dollar is also still key in a week where the FOMC monetary policy decision will be scrutinised. We consider the outlook for forex, equities and commodities.
Strap yourselves in as the Brexit ride has not over yet. It could be even more wild week than the last. For a third time Prime Minister May will try to get her much maligned Withdrawal Agreement through Parliament (which needs to be done by 20th March). Whilst previous meaningful votes have failed somewhat spectacularly, this third attempt is likely to be a lot closer as the “dream” of Brexit could slip from the grasp of some MPs. Around 80 hard Brexiteer Conservative and 10 DUP MPs need to be persuaded. If they are worried that extending Article 50 would kick Brexit into the long grass, they could reluctantly be persuaded to back Mrs May. If she wins, it would drive Cable towards $1.34/$1.35. However, if MV3 fails then uncertainty grows and the power lays squarely in the lap of the EU-27, with Mrs May required to beg for an extension. An Article 50 extension needs unanimity to be granted, this is by no means guaranteed. Donald Tusk has been encouraging, but this has been thrown into doubt by sources within the French government which say they would oppose an extension. It only takes one. A crucial sticking point would be to extend for what purpose. Unless Mrs May can prove herself to be an adept negotiator (as yet something she has failed to do) then the EU-27 could reject an extension and this would massively increase the risk of the two nuclear options (exit with no deal, or forces the UK to unilaterally revoke Article 50). Sterling would plummet. Expect a nervous week with one week Cable options at their highest volatility than any time since the referendum.