Much like a rollercoaster ride, this week’s Brexit developments have been full of twists and turns…but have ultimately taken us right back to where we started the week. PM May’s Brexit deal was roundly rejected on Tuesday, but the Prime Minister subsequently won Wednesday’s no confidence vote. As we head into this weekend, May is once again headed to Brussels to try to forge an agreement that will be acceptable to both the EU and Parliament.
The Prime Minister continues to rule out a second referendum on the issue, though betting markets are more open to the idea; according to Bloomberg data, traders now see the odds of another vote at 42% while the implied probability of a no-deal Brexit has fallen below 12%.
For FX traders, the (perceived) drop in the likelihood of a hard Brexit are a bullish sign for the pound. GBP/USD is poised to finish higher on the week (notwithstanding Tuesday’s intraday swoon) and see its highest weekly close in over two months.
With Theresa May set to reveal her “Plan B” proposal on Monday and a vote scheduled for January 29th, traders look likely to take another ride on the Brexit rollercoaster next week… the only question is whether we’ll fall off the rails at some point!