September 23, 2019 — 4 min read
Brexit has been an issue of conflict from the outset. The winning referendum majority was fine (given this was among the bigger mandate votes in UK history) and the resultant deal politics necessary to reconcile the UK’s divorce have been complex and polarising.
The Conservative Party had its share of political fissures when the so-called rebels were actively manoeuvring to put the brakes on a no-deal Brexit – acting in opposition to the agenda of their leadership and core party earlier this month. Philip Hammond, former Chancellor, appeared to co-ordinate the rebels’ efforts explaining he was attempting to secure further time for reflection as well as blocking an exit without a deal.
This internal posturing and fracturing from within the party definitely had an impact on Boris Johnson’s ability to use brinkmanship to draw a deal from the EU. It could be argued that Theresa May leaving Brussels with the firm commitment from the EU Brexit team that there would be no other deal to discuss or renegotiate, and then rapidly performing a 180 degree turn on this sentiment to present to Boris that it could be possible to find an Irish border solution within 30 days could be attributed, at least in part, to fear of what a no-deal would mean.
But, they are not the only party experiencing significant binary party politics. At the Labour annual conference in Brighton this year, the first day was fairly dominated by a decision that may split the party in terms of core strategy.
On one hand, Jeremy Corbyn’s plan if they win a majority in a general election would be to remain neutral and take three months to put together a new Brexit deal, then hold a referendum in six months and make a decision then about which side to adopt as policy. There has been a robust core of activists that are mooting for an unadulterated Remain stance.
So far this appears not to have been resolved as the party returns today for its second-of-four planned sessions and will be debated openly today. Mr Corbyn could not be drawn in an interview when asked which side he leans towards (in terms of Leave/Remain) simply reiterating that it would be dependent on what deal they might negotiate at the time.
One thing we know about the direction of the GBP is that it reacts adversely to uncertainty when it comes to national stewardship, and so perhaps we may see further volatility to add to the larger peaks and troughs we saw during the last week. If a direction is still unclear leading up to the end of October, it is likely that the Pound will be muted in strength. At the time of writing the live market rates are:
In the case of the Pound, the overall trend continues to edge higher week on week since mid-August, albeit in a more erratic trading pattern. In the case of EURUSD, weaker economic figures continue to be produced as expected and this has meant the pair ducked under the 1.1000 mark.
It could be expected to trade in this area now until the stimulative measures proposed by Draghi and the ECB start to pervade the economies of the bloc and produce stronger performances in key economic areas, in particular, price pressure in the form of CPI would be a critical figure to watch to signal a possible return of strength to the EUR.
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