BREXIT day 1.215 - The day before the day

Macro
Steen Jakobsen

Chief Economist & CIO

Summary:  Day 1.215 since the Brexit - Will PM Johnson prevail or call an election by tonight?


Yesterday the Governments “meaningful vote” was thrown out by the Speaker. Late last night the WAB, Withdrawal Agreement Bill, was published and today is the 2nd reading.

What happens today: Two major votes

# Vote 1 – The WAB – Government expected to win…

# Vote 2 – ‘The Program Motion, PM” – here it is 50/50 if government will get support.

If #1+#2 pass the Commons moves to a 3rd reading where MP’s gets to attach amendments: Two such are expected: A Custom Union and 'Final Say' vote from Labour.

Saxo Bank view:

We stick by 50% chance of pass by October 31st, but there is now two other scenario’s likely: A General Election and further extension, plus of course a small but still realistic chance of hard Brexit if Downing Street insist on disrespecting Parliament.

GBPUSD- Hourly 1.3013/1.2951 – Buy/Sell Either side break – MACD turned down… Daily – clear uptrend in place..

FTSE – Range 7440 -7003 – react to break of either side….

GBP hourly:

Source: Saxo Bank
GBP daily:
Source: Saxo Bank
FTSE:
Source: Saxo Bank

The Guardian: The second reading will be a good test of support, but even assuming it passes, the government’s difficulties could begin in the next stage of the WAB, when MPs can table amendments. Among amendments expected are ones seeking a customs union with the EU for the whole UK and one making approval of the Brexit deal conditional on a second refer

One Conservative adviser said pro-Brexit cabinet ministers and Tory backbenchers would never be able to live with a customs union attached to the bill, so it was “not going to happen”. The aide said this scenario would probably lead to renewed push for an election, with Conservative party headquarters still preparing for a pre-Christmas poll – regardless of whether the Brexit bill passes or not.

If any of these amendments are passed, it will not only require a departure extension but will effectively wreck the bill for the government. The most likely outcome then would be for Johnson to seek an election. However, if all the amendments fail then MPs will be worked flat-out to try and pass the necessary legislation for Johnson’s deal before 31 October.

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