A Reheated Deal Or Dog's Breakfast - MPs Decide
Finally, the frantic negotiations have been concluded and the so-called "deal" (Withdrawal Agreement) between the UK and the EU has been agreed. Sterling performance did not disappoint - rising to 5 month highs against the Euro and the US Dollar.
The deal was announced by way of tweet from Prime Minister Boris Johnson: “We’ve got a great new deal that takes back control – now parliament should get it done on Saturday so we can move on to other priorities.”
And therein lies the rub: will Parliament vote it through? After all, the consensus amongst serious political analysts is that there is no substantial differences between this deal and the one the previous prime Minister tried, and failed, 3 times to pass through the House of Commons. It is worth noting at this point that this deal is merely a Withdrawal Agreement and therefore addresses the terms of the UK's exit from the EU. It is not a trade deal.
Labour, the SNP, the DUP are clear that they will not support it. The ERG are still deciding. Indeed, an analysis from the Financial Times this morning suggests that it will fail to pass whith their analysts forecasting: 321 MPs voting against the deal, and 318 supporting it. This is why the Prime Minister is reported by the Guardian to be planning to "love bomb" rebel Labour MPs. So anything could happen.
So prepare for another volatile day - especially if there are any announcements about specific Labour MPs defying Jeremy Corbyn's call to vote down the deal. So today could be much like the last 7 trading days; where sterling has seen a whirlwind of activity. However, today we expect more "directionless" sensitivity (wild rises and reversals) in Sterling. Reaction to political developments is likely to be a lot more exaggerated than would otherwise would be the case during normal times. It is worth noting that the pound is well up from last week’s lows of around $1.22 and remains on tenterhooks ahead of Saturday’s special Parliamentary session.
In other news, China reported the slowest year-on-year economic growth for nearly three decades. Q3 GDP came in at 6.0%y/y, below market expectations of 6.1%.
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See you next week!