What Happened to the March 29th Brexit deadline?
Following a series of failed votes in parliament, the only action that May could get any support for was seeking an extension to the Article 50 process. Fortunately, the EU granted this request. The original March 29th Brexit deadline has been extended to April 12th. May now has until that date to secure parliamentary backing for her Brexit deal. This will then see the UK officially leave the EU on May 22nd. However, if she cannot get backing, the UK faces either leaving the EU without a deal or having to revoke Article 50 and cancel Brexit.
Indicative Voting Fails to Deliver Results
Following news of the initial Article 50 extension, MPs called to parliament for a special session to vote on how they would like to proceed with Brexit. The “indicative votes” were not legally binding for the government. They were, however, designed to give a clear idea of how exactly MPs wish to achieve Brexit. The session included eight different proposals such as seeking a longer Article 50 extension and holding a second referendum. However, the session passed without backing for any of the proposals.
MPs Fail to Find A Solution… Again
Following the failed indicative vote, MPs were then called to parliament again on Monday night. This time, it was to vote on four proposals including a customs union, a new version of the common market, a second referendum and canceling Article 50 to remain in the EU. Bewilderingly, parliament was once again unable to agree on a solution. While a second referendum received the most support with 280 “yes” votes, it was still defeated by a majority of 292 votes against.
So, What Happens Next?
Following yet another baffling display of indecision by UK MPs, the clock is ticking for May as the April 12th deadline approaches. May has now ordered cabinet ministers into an intense five-hour session of meetings today. These will aim to find a way to break the deadlock. According to cabinet sources who spoke with Reuters, May will hold a political cabinet meeting. In it, she will discuss Conservative party matters, followed by a traditional cabinet meeting among the top government ministers. In all, both cabinet sessions are expected to be around five hours long.
Making Things Difficult for the BOE
At its latest meeting, the BOE once again highlighted the negative impact that prolonged Brexit uncertainty is having on the economy. While the bank maintains its preference to continue with its path of policy tightening, the risks around Brexit, and specifically the chances of a no deal Brexit, mean that it is having to sit tight for now. Furthermore, BOE governor Mark Carney has made it clear that the bank could also be forced to cut rates. This, of course, would occur in the worst case scenario where the UK leaves the EU without a deal.
GBPUSD continues to trade towards the lower end of the 1.2970s to the 1.33s range which has framed price action over the last couple of months. Price has tested the 1.2975 – 1.2996 support region four times over that period. And it’s looking likely to test it again soon. If we break below here, the next structural support level is around 1.2780s, with the current bearish channel low coming in just above. To the topside, the bearish channel resistance line is the next technical resistance to watch. However, for now, focus seems to be on a drift lower.