UK: The vote after the vote - Rabobank

In view of Jane Foley, senior FX strategist at Rabobank, if the UK PM loses the parliamentary vote on her Withdrawal bill this evening, there is plenty of speculation that she will attempt to put it in front of The House of Commons again.

Key Quotes

“Currently it is difficult to be certain of what exactly will happen after this evening’s vote.  However, PM May has only three days to present a Plan B and it is reasonable to expect that another parliamentary vote could be an option.  That said, for this to be successful, or even attempted, it is likely that PM will have lose her vote by a much smaller than expected margin.”

“If lawmakers are not faced with another vote after this evening, it is likely that different ballot papers will be prepared. Having withstood a leadership challenge at the end of last year, May cannot be pushed out of office by her own party for a 12 month period. However, in the event of a huge defeat it is possible that she would resign and that a leadership election would take place.  This, however, would only serve to delay progress on the Brexit plans.”

“Whether it be another vote in the Commons, another referendum or a general election it is very likely that the outcome of this evening’s key decision by MPs will feature more ballot boxes. For the pound this implies more uncertainty and the potential for more volatility. GBP investors can be expected to favour any outcome which appears to suggest a hard Brexit is off the table.  This suggests that a second referendum could be cautiously welcomed.”

“We would expect that confirmation of a delay to Article 50 would pushed EUR/GBP back towards the 0.87 area, unless the news also featured a general election.”