Theresa May’s concession that Brexit may be delayed, the following reaction may be useful. Contributor JR Zhou, Market Analyst – INFINOX.
The brinkmanship has been breached. For the first time, the Prime Minister has conceded that Brexit could be delayed.
For all her couching and hedging – she insisted any extension would be ‘short and limited’ – simply by uttering the word delay she has given the markets hope. Hope that the Brexit can will be booted sufficiently far down the road that calls for a second referendum will gain further momentum.
The Labour Party’s belated call for a second referendum gave the Pound an early morning boost, and Mrs May’s lunchtime concession in the Commons accelerated it past $1.322, its highest level for a month.
For weeks the Prime Minister has been accused of deliberately running down the clock in order to pressure dissenting MPs into backing the Brexit plan she has painstakingly negotiated with Brussels.
But with her whistlestop diplomacy around European capitals failing to produce any significant concessions from the EU, the time pressure has instead forced the Prime Minister’s hand. She knows the only thing a clear majority of MPs agree on is the need to avoid a ‘no deal’ Brexit at all costs. By giving them the option of voting for a delay she hopes to keep the initiative, or at least a semblance of control, in the febrile Westminster atmosphere.
But for the markets, the takeaway is simple but irresistible. A ‘no deal’ Brexit is no longer the default option. For it to happen, MPs will actively have to choose it. Slim though that reassurance is, it has proved catnip for sterling.