Today U.K Prime Minister Theresa May is due to deliver her Brexit ‘plan B’ to Parliament and this could lead to a volatile trading day for Sterling exchange rates against all major currencies.
It is widely expected that she will make slight alterations to her approach with the Irish border backstop which had been one of the main sticking points with the current plan.
In my opinion it really is hard to see how the latest plan will turn enough heads to get voted through on Tuesday 29th January, and because of this there are a number of possible outcomes that may follow.
Personally, I feel that there is now a high chance of the Government seeking to ask for an extension on Article 50 and to essentially ‘kick the can down the road’ for a number of months. The European elections are due to take place in May so a delay may be sensible until later in the year if not longer.
Even with this delay it is still very difficult to see how the deal we have been offered will change drastically enough to get through, so the markets have been starting to price in alternatives, inclusive of a second referendum and no Brexit at all.
I feel that a no deal Brexit is now as good as off the table and that Parliament will not allow this to happen, and that because of this the Pound could still be set for a rocky but positive run of form.
Currently Sterling is sat just above the 1.70 level against the Canadian Dollar and I personally see a higher chance of gains towards the 1.80 mark rather than a drop off towards the early 1.60s.
Canadian Retail Sales Wednesday
From the Sterling side, we have unemployment figures due out tomorrow morning, however there is very little expectation of any surprises there. On the other side of the pairing we have Canadian Retail Sales figures out on Wednesday afternoon. Analysts are expecting a poor release and a drop off in Retail Sales for Canada. Should this be the case, then we may see Canadian Dollar weakness on Wednesday afternoon.
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