Morning Brief – Monday 21st

B-Day!

The pun above was simply too good to miss. Musing upon its formation ahead of May’s speech before the House of Commons this afternoon its brilliance seemed surpassed only by its malleability and simplicity. Perhaps a pun on the gift giving on one’s day of birth should May’s speech have been a triumphant suggest; otherwise a patriotic reminder of the landing on the beaches of Normandy should the performance have stood the chance of changing the course of European history; upon the maturity of an unspeakable shambles, it could even be a pun on a plumbing fixture commonplace in continental Europe used to clean one’s… see Wikipedia for the rest. Despite the brilliant malleable simplicity of the pun, having watched May’s speech closely, none of the three interpretations appear appropriate!

Certainly, as is clear from the foreign exchange market, May’s deal cannot be considered a path defining moment in the future of Britain’s relationship with Europe – these events normally invite a shift of more than 0.5% in the exchange rate! Sadly, neither might it be considered a gift to parliament nor the Commons’ reaction a birthday-like reward to Mrs May! Much to the disappointment of my title, even the greatest sceptics of May’s performance this afternoon would not have condemned her words to the status of… See above.

Enough fun. What did May really offer? Well first off, to the immediate disappointment of markets, she ruled out delaying Brexit negotiations seemingly putting a lid on the market-friendly suggestion that Article 50 be delayed. Counterbalancing this disappointing news, May quickly followed up by extending Parliament’s right to have a greater say in the future UK-EU trade deal. Overwhelmingly, however, from where I’m sitting, Plan B is Plan A with its fingers crossed even tighter. As a Conservative pro-second referendum Member of Parliament stated on Twitter, “It’s like last week’s vote never happened”.

MPs and markets now have a week in order to digest the PM’s statement before voting on what will materialise as an overwhelmingly neutral motion. The Pound immediately tried to test the lower bound of today’s trading range, however, finding limited support and encouraged by the inclusion of Parliament in the final vote, the Pound rose to test and struggle to break 1.29. From the looks of things, this rate will not survive tomorrow unless something tangible is found to support the largely technical move – sell the Pound fast?

Discussion and Analysis by Charles Porter

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