UK avoids epic banana skin
14 March, 2019
Yesterday evening parliament voted to take “No Deal” off the table entirely. The motion to reject a no-deal Brexit under any circumstances was passed by a majority of 43: 321 to 278. As a consequence, the pound made further gains against the euro and US$.
12 MP’s including cabinet ministers defied the three-line whip and abstained. Unusually, those who did abstain have not been asked to leave. With the PM twice being defeated and unable to take control of her party it raises the question of how long she can stay in power. Jeremy Corbyn will be proposing alternatives to the deal, no doubt there will be other amendments proposed.
This evening MP’s will vote on whether to request an extension to the article 50 but as PM May went on to say yesterday: “The EU will want to know why we want that extension. The house will have to answer that question: does it want to suspend Article 50, does it want a second referendum, or does it want another deal, but not this deal,”.
Chancellor Philip Hammond yesterday pledged to spend an extra £26.6bn to boost the economy if MP’s vote to leave the EU with a deal. And, in a surprising turn, the Chancellor called for a cross-party compromise to “put aside our differences and seek a compromise”. Any further talk of this nature is likely to be positive for the pound, so if you want to buy the pound in the coming 6-12 months, make sure you’re in touch with your consultant to effectively plan to mitigate against sterling continuing to strengthen.
Key points from yesterday’s spring statement:
– Growth forecasts cut for 2019 to 1.2%
– The UK expected to grow by 1.4% in 2020
– A roundtable will be chaired by Hammond on minimum wage productivity
– The UK borrowing to be £3bn less than forecast
– In the event of a no-deal Brexit, the UK to cut tariffs.
In terms of economic data, it was mainly US$ data released yesterday: Core Durable Goods Orders m/m came in worse than expected at -0.1% and Product Price Index (PPI) which is a leading indicator of consumer inflation came in worse than expected at 0.1%.
Today is a fairly light day for key economic data so all eyes will remain on developments throughout the day and of course, the key vote tonight. Over the coming days and weeks it is likely that there will be continued volatility for the pound, which can be the perfect opportunity to utilise limit orders. If you have not already discussed with your consultant the benefits of limit orders and how they can be applied to your situation then please do get in touch.
In other news, Boeing shares go into negative territory as Canada is the latest country to ground the 737 Max 8.