Good morning,

After a tense round of voting last night in parliament, the UK government managed to take a big step forward towards Brexit, only for the door to swing back and hit them in the face. Whilst the government did manage to pass a vote on the withdrawal agreement, which is something that eluded Theresa May three times, the opposition then rejected a three-day timetable allotted to debate the deal before passing.

Essentially, this means that whilst a deal is now agreeable to parliament in principle, the opposition has demanded more time to debate the finer points and add amendments.

This was unacceptable by the government even before the votes took place, with Number 10 threatening to push for a general election in the delay period offered by the EU if the bill couldn’t be passed by the 31st of October. The threat alone caused sterling to wobble to 1.1559 on GBPEUR and 1.2880 on GBPUSD – the former dropping 0.4% and the latter 0.65%.

Upon confirmation that the government has now ‘paused’ the bill’s progress through the house to discuss other matters, all eyes now fall upon the EU’s response – how long an extension is offered for and if they decide to at all will determine sterling’s health in the short run.

If the EU offers an extension until the 31st of January, as specified in the Benn amendment letter last week, the UK will almost certainly be heading for a general election before Christmas.

Have a great day. 

Author: Joshua Haden-Jones, Senior Private Relationship Manager