Brexit deal done – now the hard work begins
The UK and EU have agreed a deal, but will it pass Parliament?
UK Prime Minister Boris Johnson appears to have done the impossible and got a Brexit deal. According to European Commission president, Jean-Claude Juncker, the two sides have hammered out an agreement that will allow the PM to come back to Parliament this weekend to hold a vote.
Johnson's deal would see the UK overall leave the single market and customs union, while Northern Ireland would have its own special place. Technically, it would still be in the UK customs union while effectively remaining in the EU’s one, with a border in the Irish sea. This deal confounds those that said the EU would not renegotiate and that a backstop was a requirement of any deal. This has now been replaced, and Northern Ireland will hold regular votes on its place in the EU customs union.
Can the Brexit deal pass Parliament?
In a sense, the detail of the deal is less important than its prospects in Parliament, at least in the short term and for UK traders. This is where the problems start. The Democratic Unionist Party (DUP) have maintained their stance, saying that they would not back this deal. Unless they do, a number of Tory MPs may not back it either. Meanwhile, Labour seem likely to vote against the deal unless it is amended to include a second referendum. Some Labour rebels may vote with the government, but it is not clear whether that will be enough to offset the loss of the DUP and some Tory MPs (both those who oppose this deal and those who have had the whip withdrawn following the September votes).
Brexit saga could drag on
If this deal does not pass on Saturday, then the likelihood is that the government will ask Parliament to hold an election. The government’s messaging suggests that ‘Get Brexit Done’ will be a key campaigning slogan, perhaps bringing some Brexit party voters to the Conservatives, while attracting some Labour and even Lib Dem voters that would see the official exit as a fulfilment of the referendum.
This deal was a surprise, but the PM still has work to do to get it through Parliament. As a result, the Saturday sitting will be crucial, as traders look to trade GBP/USD and the FTSE 100 at the weekend. IG’s weekend markets for these allow clients to trade what could be a volatile session, while the volatility will also continue beyond Saturday if Parliament votes for an election, and then into the election campaign itself.
A Brexit deal has been struck, but it is not the end of the saga.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Trading around Brexit
Find out how the UK’s exit from the EU continues to affect traders, and discover:
- The unique opportunities in a ‘hard’ and ‘soft’ Brexit
- The markets you should be watching
- Everything that’s happened so far
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.