Pound pushes higher as May reaches out to Labour for support
The Pound has been moving higher after yesterday’s marathon Cabinet talks ended with May announcing that she would begin cross-party talks with Labour to try and break the Brexit impasse.
She will seek another short deadline extension and hope to get the extra votes needed to push her withdrawal deal through. It’s expected she will want to keep the existing (EU-agreed) divorce terms but would look to amend the political declaration about future trade.
Labour has been supporting closer ties to the EU after Brexit – favouring a customs union with the EU. It’s likely May will now need to flex on some of her red line which ultimately makes a softer Brexit more likely. Whether they can actually come to any agreement or not is yet to be seen. There are some suggestions that Corbyn might not be that helpful, instead preferring to allow the Tory party to implode in the hope that would lead to a general election (and him seizing power).
This announcement has been met with fierce criticism from Tory Brexiteers and a large number of her own Cabinet. It could lead to some Cabinet resignations over the coming days and potentially a full-on split in the Conservative party. Obviously, this could lead to some big problems for the government, so this story is by no means over and there’s likely to be some more twists and turns ahead.
As a result, the Pound has pushed up around 1% against both the Euro and USD from yesterday’s low. The market will now be focused on developments in these cross-party talks which could start as soon as today.