Brexit: the new strategy of the British premiere

Tomorrow, the deputies of the House of Commons will resume the debate on the draft agreement on the withdrawal of Britain from the EU. Approximately, they will last until the beginning of the next week, whereas the voting itself should take place on January 15.

However, it is impossible to talk about this with certainty: Brexit is still in limbo. Meanwhile, Theresa May assured the public over the weekend that she would not postpone the voting date again but some experts doubt it. Indeed, since she postponed the December meeting, little has changed. Dozens of conservatives are still not ready to support the proposed deal.

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Apparently, the prime minister is betting on the parliamentary fear of the chaotic Brexit but this strategy can be not that good, given the number of conservatives who voted at the end of last year for a vote of no confidence in the current government. Let me remind you that May's opposition party wing of party members has risen to 117 deputies. This result completely leveled optimism about the final result of the vote. And this is understandable, the prime minister needs to consolidate not only the absolute number of conservatives but also attract 10 more members of parliament to his side in order to approve the Brexit deal.

It is also worth noting that the "ordinary" members of the Conservative Party, who do not occupy any positions, also do not support the Theresa May deal. At least, this is evident in the results of a sociological survey conducted last week. Thus, almost 60% of 1,215 respondents from Tory were against this agreement, according to the influential agency YouGov. Moreover, almost 80% of them called the risks in the chaotic Brexit "exaggerated or made-up". This is bad news for May supporters. For now, the Euro-skeptics from the Conservative Party must go against not only their political convictions but also the opinion of the majority of party members. Last year, representatives of the Labor Party categorically refused to "lend" to the cabinet of ministers.

In other words, the situation has stalled again. May continues to aggravate the situation, reinforcing the fears of tough Brexit, in particular, she created and headed the new government committee, which is responsible for preparing the Cabinet of Ministers for the country's withdrawal from the European Union if London and Brussels cannot finally agree on the terms of the agreement. According to the representative of the prime minister, the committee will develop a "complex of emergency measures" in the financial, trade, customs, immigration and other areas in the case of the chaotic Brexit.

The creation of this committee can be viewed as a political move on the eve of a key vote since previously, the same committee dealt with issues of exit from the EU (although it did not have so much authority). Therefore, traders actually ignored this fact and focused on possible scenarios for developments in the coming days.

One option is the Brexit to be postponed indefinitely is less likely. The European Court allowed this option at the end of 2018, explaining the provisions of the 50th article of the Lisbon Treaty. However, Theresa May and the British Brexit Minister Stephen Barkley categorically rejected this option. Actually, like the option of a repeated referendum. By the way, the likelihood of a new referendum was largely reduced after the Laborists did not support this idea to the surprise of many Britons. The Labor Party leader said he supports Brexit but on completely different terms. In other words, the option of re-plebiscite has sunk into oblivion.

There is another script. According to the British press, Theresa May's team is developing a plan according to which parliament will approve the deal but on condition that the European Union provides additional concessions. Thus, the "ball" will again be on the side of the EU and the fate of the "divorce process" will depend on Brussels.

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It is difficult to say now how realistic this plan is, given the fact that at the end of last year the European Union refused to sign any additional conditions regarding the validity period of the backstop. However, just today, Irish Prime Minister Leo Varadkar announced that Brussels is ready to provide "new written guarantees" regarding the Northern Ireland border. It is likely that this issue will be solved at the last moment, especially if the British force Europeans to make concessions. In my opinion, this is the most realistic scenario, given the dubious "viability" of the other scenarios. Obviously, the majority of politicians and deputies (British and European) least want to feel the consequences of the chaotic Brexit, hence, the likelihood of making a key decision at the last moment is quite high.

In the context of the foreign exchange market, the pound was again taken hostage by uncertainty. If the deputies on January 15 vote for the deal but with reservations, the British will still remain under pressure. This suggests that the impulse jumps in the price of GBP/USD must be treated with caution - the position of Brussels can neutralize the initial optimism. In general, trading pounds before a key vote is not the best trading idea, given the precariousness of political structures.

The material has been provided by InstaForex Company - www.instaforex.com