There was suspense was in the air today as anticipation mounted ahead of the “meaningful vote” on Theresa May’s Brexit deal later this evening.
With speculation rife over May’s deal facing defeat in the House of Commons, investors are likely to be more concerned with the margin of loss to determine what could happen next. An outcome where the Prime Minister loses by less than 100 votes could offer the government a lifeline to pass an amended Brexit deal through parliament on the second try. However, if May experiences a crushing defeat, this opens doors to Labour triggering a vote of confidence, an extension of Article 50, May seeking further concessions from the European Union, a snap election and in extreme scenarios a second referendum.
Market sentiment will most likely receive a solid boost if May unexpectedly wins the meaningful vote while a narrow loss is seen removing some uncertainty. A heavy defeat of May’s Brexit deal will negatively impact risk sentiment and severely punish Sterling.
In regards to the technical picture, the GBPUSD’s outlook hangs on what happens after the “meaningful vote” this evening. Although the outcome remains uncertain, it will certainly have a profound impact on the British Pound. Technical traders will continue to closely observe how the GBPUSD behaves within 1.2920 – 1.2700 trading band.