Is There Any Exit From Brexit?

“Final vote on Brexit will take place on Tuesday in the House of Parliament.”

We were sure of that yesterday, but something went wrong and U.K. Prime Minister Theresa May postponed the final vote on Brexit draft plan. The reason is simple: she realized that the document in the current form won’t be accepted. She will have to work more on it, to discuss it with EU as well as promote existing plan to the House of Commons for several days – or maybe more.

All these discussions, of course, have direct impact on the value of British assets, as they allow market participants to make assumptions about the date and results of the final vote. The heat on the markets began yesterday when the Pound sank to 20-month lows “throwing away” from the market imprudent optimists.

In anticipation of the final results, you should pay attention to the following points. First of all, if Parliament refuses the current deal, it can put even more weight on the pound. In this case there is a prospect of Britain’s exit from the EU “without a deal.” In other words, the country will lose not only a powerful representative rear on the world stage in the form of the European Union, but also won’t receive any benefits as a result of its exit. The country will have to live in new realities, constantly testing the limits of what is permissible – and indeed, denoting them for themselves.

Of course, this situation does not suit the markets: this is an extremely negative scenario for the pound which is ready to lose all its former attractiveness to investors. Yesterday the pound was pushed back to 0.9080 EUR and to 1.2500 USD.

However, if the House of Commons will oppose Brexit plan approved by the EU, the government will have 21 days to propose a new plan and Theresa May will be able to make changes to it. By the way, the chair under the Prime Minister is no longer reeling: in fact, she is one step from loose it. Theresa May has to make decisions “on the run”: the candidate in her stead has already been selected. However, the United Kingdom considers her responsible for Brexit, and therefore will not calm down until she brings the process to the end.

If the House of Commons, on the contrary, is ready to accept the Brexit plan, this will help the pound to regain its positions, as well as to return some of the losses in the stock market.

Regardless of the decision, Britain’s exit from the EU will take place on March 29th, 2019. If there is an agreement with the EU at this point, Britain will have a transitional period until the end of 2020 with the status quo for many laws and regulations meantime. Without an agreement with the EU, there will be no transition period, the situation for business and citizens will change immediately and dramatically. This is why markets fear Brexit without a deal with the EU.

Let us recall how it all began. The Brexit referendum was held on June 23th, 2016, when 52% of Britons voted to leave Britain from the EU. On this news GBP/USD collapsed by 7% in one day, and intraday amplitude reached 12%.

The upcoming vote is likely to cause less volatility but, nevertheless, can affect the course of trading and cause a change in leverage, as well as provoke stop-outs and margin-calls among traders with positions in GBP pairs and in British stocks.