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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enough to offset the loss of the DUP and some Tory MPs (both those who oppose this deal and those who have had the whip withdrawn following the September votes).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.

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