May Brings Vote Forward
Brexit negotiations have once again swung into the spotlight. UK Prime Minister Theresa May has announced that she will put her Brexit deal before parliament in a vote in early June.
May has been engaged in cross-party talks with Labour over recent weeks. The talks are part of her battle to break the political deadlock preventing her from gaining backing for her deal.
May has so far suffered three defeats in parliament. In fact, her first loss marked the largest ever government defeat in the House of Commons. May has stated that if she is unsuccessful for a fourth time, there will be no fifth attempt.
Cross Party Talks
Talks with the Labour party began shortly after the third parliamentary defeat. May’s spokesman has described them as “useful and constructive”. However, as yet, nothing concrete has been delivered and cavernous differences remain.
May’s spokesman said that the PM has been clear on the government’s “determination to bring the talks to a conclusion and deliver on the referendum result to leave the EU”.
A Labour party spokesman speaking on behalf of leader Jeremy Corbyn stated that the Labour leader had “raised doubts over the credibility of government commitments, following statements by Conservative MPs and cabinet ministers seeking to replace the prime minister”.
Why An Earlier Vote?
May’s decision to bring the fourth Brexit vote in June is so that UK MEP’s can give up their seats in Brussels if a deal is reached. This means that they wouldn’t have to attend the European Parliament when it begins in July.
Speaking with reporters, the UK Brexit secretary Steve Barclay said:
“It is now time for Parliament to make a decision, reflecting the manifestos of both the Conservative and Labour parties at the last general election and to deliver Brexit in the way that the public were promised.”
Under the current conditions, the UK is should be leaving the EU on October 31st without a deal. May has until that deadline to secure a deal.
As such, the PM has come under criticism for attempting to pass a deal so quickly and not using more of the allotted time. Jeremy McDonnell of the Labour party told reporters:
“Our big problem now is if we’re going to march our troops in Parliament to the top of the hill to vote for a deal and then that’s overturned, literally, in weeks, I think that would be a cataclysmic act of bad faith.”
For now, traders wait to hear any details from the ongoing cross-party talks. These will be used to gauge whether May is likely to succeed.
The issue now is that there is more potential that a second referendum could come down the line. This will only be if May suffers another defeat, in order to avoid the UK leaving without a deal.
GBPUSD is at a very interesting technical juncture. After breaking down through the bottom of the 1.33 – 1.30 range, price is now testing structural and trend line support at the 1.2895 level.
We could view the rising trend line as the neckline to the large head and shoulders pattern which has formed over the year. The left shoulder being in January, the head in March and right shoulder in May. If we see a break below this level this could pave the way for a much deeper run in GBPUSD, targeting 1.2798 initially and then beyond.