Brexit Update: GBP Rises As EU Repeal Bill Passes First Round of Parliamentary Approval

Sep 12, 5:49 pm

Parliament Approve Bill in First Vote

The UK government this week moved one step closer to pursuing its mandate to withdraw the UK from the EU after the House of Commons approved PM May’s EU Repeal Bill in the first round of parliamentary voting. Receiving a majority of 32 votes, the Repeal Bill will now have to pass parliamentary scrutiny before being officially approved.

The passing of this first round is an important moment as seven labour MP’s turned against their own party in order to vote in favour of the bill after Jeremy Corbyn voiced his desire for Labour MP’s to vote against the bill. Indeed, during the lively debate held ahead of the vote, many MP’s including some from the Conservative party, argued against the bill before it was eventually approved. The tightest voting as in regard to the government’s proposed timetable for the Bill which saw voting of 318 to 301.

The main aim of the Bill is to move into the UK’s hands the thousands of EU laws and regulations which have come into existence since the UK joined the EU 44 years ago. The Bill has been styled as necessary to streamline and tidy up the UK’s statute books so that they are clear and straightforward when the UK leaves the EU in March 2019.

[Infographics] BREXIT: Then, Now, After

MP’s Concerned Over “Henry VIII Powers”

However, many MP’s have expressed concern over parts of the Bill which seek to introduce the ability for the government to change and pass legislation with only minor parliamentary scrutiny, referred to as “Henry VIII Powers”. One key highlight from the debate was that MP’s from both parties called for members to be afforded the right to “triage” new rules coming into domestic law, to identify the ones most in need of further parliamentary scrutiny.

UK Seeking Post-Brexit Security Partnership with EU

Following the vote, the release of a government paper, revealed that the government wants to continue collaborating with the EU on security operations, contributing troops and other military resource to the EU.  This continued collaboration in this area also includes the proposition of agreeing joint foreign policy positions including international sanctions against terrorist groups or states posing a threat.

Following the UK’s triggering of Article 50 in March, PM May cautioned the EU that the absence of an exit deal would mean that “co-operation in the fight against crime and terrorism would be weakened”. The EU took this message as a threat and a sign that the UK would use its defence cooperation as leverage in its negotiation with the EU.

The EU responded quickly to the release of the government paper with the European Parliament’s Brexit coordinator Guy Verhofstadt stating that the EU would not allow the UK government to “trade-off” on security.

Full comment from Verhofstadt:

“It is vital that the EU and the UK continue to work together, as our common security is intrinsically interlinked. However, the European Parliament has made it clear that whatever the outcome of the negotiations on the future European Union-United Kingdom relationship, they cannot involve any trade-off between internal and external security, on the one hand, and the future economic relationship, on the other hand. Furthermore, we need to make sufficient progress on the withdrawal agreement, before we can discuss a future partnership.”

David Davis Defends UK’s Position

Commenting on the latest positional paper relating to Brexit, David Davis, the UK’s Brexit secretary explained that “After we leave the European Union we will continue to face shared threats to our security, our shared values and our way of life.

“It’s in our mutual interest to work closely with the EU and its member states to challenge terrorism and extremism, illegal migration, cyber-crime, and conventional state-based military aggression.”

This latest paper and comments from both sides show that a great deal of tension remains between the UK and the EU with neither side looking to budge. The EU remain adamant that the UK must first of all finalise the terms of its departure, including a proposed “Divorce Bill” before any agreements can be made on the future relationship, including future trade-agreements which the UK is keen to clarify.

Technical Perspective

GBPUSD is currently challenging the 2017 high around 1.3276 while still in the broader rising wedge formation that has framed price action since the GBP flash-crash low last year. A break higher here opens up the way for a run up to test the rising wedge resistance line with the September 2016 high of 1.3462 just above. For now the 2017 high remains the key pivot and unless broke there is the chance of a reversal lower from this double top formation.

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With over 6 years’ experience analysing currency markets, James is now a well-known industry analyst focusing on price action trading and fundamental drivers. Beginning as a private retail trader, James developed a strong interest in understanding the fundamental aspect of the market before pursuing technical trading capabilities which he now uses to identify opportunities over a short-term horizon. Alongside his market experience, James is also IMC certified having achieved the qualification to help further his understanding not only of the markets but the industry as a whole. James has a strong interest in both fundamentals and technicals and uses both forms of analysis in generating and executing trade ideas, with trades generally lasting from a few hours to a few days.