Sterling dips mildly as new development puts the prospect of no-deal Brexit back on table. The newly elected House of Commons will likely have its first vote on the Brexit Withdrawal Agreement on Friday, which will likely be passed with the Conservative’s majority. UK is set to leave the EU on January 31.
However, it’s reported that Boris Johnson will attempt to include text in the legislation that prevents the government from extending the transition period, beyond end of 2020. The move is believed to be based on the Conservative’s manifesto of not extending the implementation first. However, that would also give UK and EU only eleven months to complete the negotiation of a trade agreement, something which usually takes years.
Separately, BoE Governor Mark Carney said that “the worst-case scenario is effectively a no-deal, disorderly Brexit. The probability of that scenario has gone down because of the election result and the intention of the new government”. Nevertheless, “the scenario itself and the risks that we protect the system against has not itself changed, it’s just become less likely.”
