UK Prime Minster Theresa May suffered a heavy defeat in the House of Commons last night, as UK MPs voted against her Brexit deal with the EU. This means that the agreement she had struck is now obsolete. So where does this now leave the UK and the Pound moving forward?
Pound to Euro forecast: Sterling prepared ahead of vote
In truth, last night’s result was widely anticipated and Theresa May’s 432 to 202 loss wouldn’t have sent any shockwaves through the markets. Looking at Pound to Euro rates and the Euro failed to make any further gains from yesterday’s high, with the Pound in fact gaining support following the House of Commons result and Theresa May’s subsequent speech.
Sterling hit 1.1308 earlier this morning and despite the Euro finding support around this threshold, it is likely that investors had fully priced in yesterday’s result ahead of time, which is why the Euro failed to make any further gains.
What next for Brexit and Pound to Euro rates?
How things will develop from here is going to be inextricably linked to how Brexit talks now progress. The PM will face a vote of no confidence tonight and whilst I believe she will win this vote, the markets are still no clearer in understanding what Brexit will ultimately mean and in what form it will finally be delivered.
It may be that the PM will be able to go back to the EU with a stronger hand, knowing that any failure to show some concessions will likely lead to a no-deal exit. With the March 29th deadline fast approaching, it is clear that something has got to shift if we are going to see a deal agreed, although I have say my optimism that this would be the final outcome is fading fast.
Another option would be an extension to Article 50 or possibly even a second referendum, but I think is unlikely based on yesterday’s upturn for the Pound despite the negative result. Euro sellers should be considering their position, as a case could now be made that they could have reached their peak based on the current market conditions.
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