Brexit impasse drags on

Summary:

• The House of Commons approved the Withdrawal Agreement Bill, it rejected the Johnson’s proposed timetable instead
• Now it’s the EU turn what to do, there is a risk of new elections in the UK if Brussels grants an extension
• British pound keeps giving back its previous gains as a Brexit drama drags on

The House of Commons approved the Withdrawal Agreement Bill on Tuesday by 329 to 299, however at the same time, it rejected (308-322) the Johnson’s key timetable motion assuming the United Kingdom leaving the European Union at the end of October. As a result, the overall situation has become yet more complex and the British currency suffered significant losses yesterday as a no-deal scenario has suddenly become somewhat more likely. What is it going to happen next? According to Reuters revelations Boris Johnson would be willing to hold new elections (as it could be the only way to move on from Britain’s Brexit crisis) once the European Union agrees to a delay until January. However, it remains unclear what Johnson could decide if a shorter deadline extension is granted. Some EU sources are reportedly considering a so-called “flextension” i.e. an extension with a maximum end date, but the flexibility for the UK to leave the block early if a deal is ratified. As for now, it appears that it’s the EU turn to respond and depending on what Brussels will do, either a new elections scenario or a “flextension” are possible.

The GBPJPY suffered significant losses on Tuesday. Some important levels to watch are 137.7 and 135.2. Source: xStation5