Summary:
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MPs to vote on withdrawal bill this evening (scheduled 7PM)
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Government expected to have narrow victory
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GBP pulls back as uncertainty ramps up
As far as UK assets are concerned the main events of the day will likely come this evening, after the stock market here in London has closed, with parliament set for two key votes. MPs will first vote on a second reading of the withdrawal agreement, with the consensus believing that the government will secure a narrow victory - which if it occurs would be the first time that MPs have back any Brexit deal.
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However, as is often the case with most things Brexit-related this isn’t straight forward and even if it passes there’s a fair chance that a vote on the timetable shortly afterwards will fail. Several MPs have already voiced their displeasure at the lack of time to scrutinise the bill, and if they vote down the program motion this would make the timeframe incredibly tight for the UK to leave the EU by the end of the month.
The schedule has two key events to watch this evening - first the vote on a second reading and then the vote on program motion. If the second fails to pass, then at the very least a short technical extension will likely be required. Source: Parliament.UK
A flowchart showing several possible paths for Brexit after this evning's votes. Source: Twitter: @ JohnRentoul
Should this play out then it would come as little surprise if the PM moved swiftly and attempts to call a general election, although this may well also be frustrated until an extension is guaranteed. If the whole Brexit process has taught us anything it is that trying to predict the next political development is something of a fool's errand and while the markets seem to remain cautiously optimistic that a deal could still come to pass, it would not be at all surprising if we see a relatively subdued day’s trade in UK assets as market participants await greater clarity before committing to any high conviction positions.
GBPUSD has dipped a little in recent trade and those looking for a further pullback may look to fibonacci retracements with the 23.6% seen at 1.2825. A break above the recent 5-month high of 1.3013 would pave the way for a further push higher. Source: xStation
The pound has dipped a little but remains well supported on the whole and not too far from recent highs. The FTSE 100 is edging a little higher and attempting to move back to the 7200 handle with Just Eat the standout performer. Shares have rallied by over 20% after the delivery firm rejected a hostile £4.9B takeover bid from Prosus, with the cash offer of 710p/share representing a 20% premium on the 594p/share bid from takeaway.com.
The prospect of a bidding war is buoying shares in Just Eat (JE.UK on xStatioN) which trade above 730p/share at the time of writing.
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