Daily Brexit update: What is ‘Rational’? What is ‘Meaningful’?


Daily Brexit update: What is ‘Rational’? What is ‘meaningful’?

Theresa May’s and Donald Tusk’s post-EU meeting comments to the press diverged ‘classically’. This is tempering sterling’s modest but significant progress at the start of another pivotal week. Having taken the sting out of the announcement of yet another delay of the ‘meaningful’ vote, the Prime Minister floated a two-month delay for the date on which Britain is meant to leave the European Union, 29th March. But later, the Prime Minister’s more familiar sentiments on a possible delay returned. An extension to Article 50 does not deliver a decision in Parliament, she accurately pointed out, whilst not doing much to contradict the intent behind multiple weekend newspaper reports suggesting the government was preparing seek a pause. If so, Tusk, would agree. The European Council President joined May in signalling that the last set of talks from a largely fruitless series in transit to, from and in Sharm el-Sheikh was constructive. Yet he reiterated his own preference for a delay, calling it the “rational” option.

Whether or not it’s the Prime Minister’s decision to make though could well become a moot point after this week. What constitutes a ‘meaningful’ vote could also be up for grabs. Whilst, the debate and voting planned for Wednesday may no longer be binding, if, the key amendment tabled by Labour’s Yvette Cooper is passed, Theresa May’s bets will probably be off. With senior Conservatives now exasperated enough to state openly that they will—in effect—vote for the Cooper plan—which gives Parliament the power to demand that Downing Street request an Article 50 extension—odds that the amendment could prevail have shortened.

Sterling has retreated over the last three hours since extending Friday’s rally, so the market has not begun to treat anything Brexit-related with much certainty. The pound’s range has in fact been no more than 40 pips against the dollar since Sunday night’s FX open. Volatility projected by one-month option trades capturing the next few weeks (for instance one-month sterling/dollar trades) continues to heat up, so the market is hardly pricing out a possible crunch of some kind towards the end of next month. But until Wednesday at least, officially, Theresa May’s Brexit is very much on, and not just in her own mind.


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