May To Attempt To Re-Negotiate Irish Backstop With EU

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Following a historic defeat for the government first time around, losing by a margin of 230 votes, Theresa May was given parliamentary support to pursue an amendment to her unpopular Brexit plan yesterday.

The UK parliament voted 317 to 301 in favor of May returning to Brussels to renegotiate the issue of the Irish backstop opting for “alternative arrangements” instead of the customs border proposed by the EU.

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Although May has consistently reaffirmed her message that the withdrawal agreement (all 585 pages of it) signed off by EU during the special summit held in November, was not open for renegotiation, she urged Tory MPs to support an amendment aimed at renegotiating the Irish backstop, the most contentious issue of the negotiations.

Speaking before the vote, May said that a victory in passing this amendment would “send a clear message to Brussels about what the house wants to see changing in the withdrawal agreement in order to be able to support it.”

May To Pursue Changes

In terms of possible changes to the backstop, May said she would pursue a time limit, a unilateral exit clause or even an alternative plan (as suggested by Tory MPs including Jacob Rees-Mogg).

Referring to further negotiations with the EU, May stated:

“What I’m talking about is not a further exchange of letters, but a significant and legally binding change to the withdrawal agreement. Negotiating such a change will not be easy. It will involve reopening the withdrawal agreement, a move for which I know there is limited appetite among our European partners.”

Tusk Says Backstop Non-Negotiable

However, the initial response from Brussels has not been encouraging with Donald Tusk, president of the European Council, releasing a statement saying:

“The Withdrawal Agreement is and remains the best and only way to ensure an orderly withdrawal of the United Kingdom from the European Union. The backstop is part of the Withdrawal Agreement, and the Withdrawal Agreement is not open for re-negotiation. The December European Council conclusions are very clear on this point. We will continue our preparations for all outcomes, including a no-deal scenario. We will also continue the EU’s process of ratification of the agreement reached with the UK Government.”

MPs Back Amendment Refusing To Accept No Deal Brexit

A far simpler amendment was also passed yesterday in parliament with MPs voting 318 to 310 in favor of an amendment which asserts that a no deal Brexit will not be accepted. In response to this amendment, Tusk said:

“We welcome and share the UK parliament’s ambition to avoid a no-deal scenario. We continue to urge the UK government to clarify its intentions with respect to its next steps as soon as possible.”

Two Week Deadline

May now has two weeks to re-negotiate with Brussels before returning her plan to UK parliament for a “final, meaningful” vote.  Commenting on the likelihood of May achieving the amendments laid out, Dominic Raab (former Brexit secretary) said:

“This is clearly a change that can be made. Michel Barnier on the 24 January made that clear. The question is do they want a deal, and the ball is in their court. And some of the pressure now is on them to decide. The deal is there to be done, now it is up to the EU to decide what they are all about.”

Technical Perspective

GBP sold off in response to the vote as the market displays its skepticism over the likelihood of May achieving a satisfactory amendment to the Irish backstop issue and successfully gaining parliamentary support in two weeks time.


For now, GBPUSD remains above the 1.2997 structural support, as well as the top of the broken falling wedge pattern. While above these levels, focus remains on a further upside test with the Q3 2018 top of 1.3304 as the key level to break.  If price breaks further lower from here, the 1.2693 structural support will come back into focus ahead of the 2019 lows.


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