Cabinet approve draft Brexit deal but Pound suffers losses on backlash and Raab resignation
We’ve had a very volatile overnight session in the FX markets with contrasting Brexit headlines.
After a marathon 5-hr meeting, Theresa May managed to get Cabinet approval for her draft European Brexit divorce bill. This initially led to a rally in the Pound. However, this was quickly met with backlash from Tory brexiteers, the DUP, and Labour MPs, which casts doubt the draft bill will get the votes needed to pass through Parliament.
Markets are increasingly concerned there will be a rebellion from hardliner brexiteers potentially calling for a vote of no-confidence in Theresa May, which is increasing political uncertainty.
The Pound was struggling for direction this morning until headlines soured with news that Brexit secretary, Dominic Raab, had resigned. He’s unhappy with the proposed Irish border backstop arrangement and felt he could no longer support the PM’s plan. This is a major blow to Theresa May as she tries to muster support for her Brexit deal.
As a result, the GBP/USD has swung well over 2-cents lower today from last night’s high. The GBP/EUR is down over 1% from last night’s high. Brexit will continue to dominate Pound movements and swing on breaking headlines. Theresa May will be keeping her fingers crossed that she doesn’t lose any further cabinet ministers.
The draft bill will now need to be approved by all the EU member states (vote expected 25th Nov) and will then be expected to be voted by the UK Parliament around the 10th December. The next few weeks are therefore going to be key for Brexit.