It is a crucial week in the Brexit process and we look at the implications for sterling. The ECB monetary policy actions have shifted the outlook for the euro, and we consider the implications of recent moves on forex, equities and commodities.
The Article 50 deadline of 29th March is still a couple of weeks away, this week is crucial for Brexit. There are likely to be three crucial votes in Parliament, starting on Tuesday 12th March where MPs get another chance to vote on Prime Minister May’s Withdrawal Agreement. Despite all the delay tactics and promises of concessions/changes, it looks as though MPs will vote on exactly the same deal as that which Parliament rejected by record majority of 230 votes on 15th January. Although Mrs. May is trying to pressure MPs again, she is likely to see another humiliating defeat. MPs have been positioning to take control of the Brexit process off the Government in recent weeks and this means there will be two further votes. On Wednesday a vote to reject a no deal Brexit and on Thursday a vote to potentially extend Article 50. Even if the Government imposes a three line whip (to force its MPs to vote their way) on all three votes, it will do little to prevent another defeat and is likely to lead to further resignations. Parliament has already indicated it will vote to prevent “no deal” will be averted and if a vote to extend Article 50 is also seen, this could even kick Brexit into the long grass. It seems to be a choice of Mrs. May’s deal or no Brexit at all but she does not look likely to win. The EU-27 needs to unanimously agree to an A50 extension and suggestions are that it would push for a one or possibly even two year extension. A long extension kicks Brexit into the long grass and opens likely softer routes, such as a second referendum. Sterling will certainly be volatile this week on these votes.