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The pound reappeared 300 points overnight. The British Brexit sent a heavy message.
FX168 Financial News Agency
On Wednesday (March 13), the pound once again became the focus of the market. The British Parliament vetoed a non-agreement to leave the European Union on the same day. Investors bet that parliamentarians will extend the Brexit deadline, which stimulated the GBP/USD to surge 2% on Wednesday, and the intraday gain once exceeded 300 points. On Thursday, the British Parliament will vote on whether to postpone the Brexit deadline. In early Asian trading on Thursday, there was new and important news about Brexit. Foreign media reported that the British government sought a third vote on the Brexit agreement.
British parliament veto no agreement to leave the European Union
The British parliament voted on Wednesday to veto no agreement to leave the European Union, which opened the door to delaying the Brexit and rehabilitating the Brexit agreement. Driven by this, the pound/dollar soared to its highest level since June last year.
On the day of the debate, the lower house of the British Parliament passed an amendment to “oppose the British “no agreement to leave the EU” under any circumstances with a vote of 312 votes and 308 votes against. The amendment is not legally binding.
Subsequently, the lower house of the British Parliament voted again, passing a government motion with 321 votes in favor and 278 votes against it, officially clarifying that the parliament opposed the UK's non-agreement to leave the EU.
After the vote was released, the GBP/USD short-term acceleration accelerated, up 1.33, and then the increase further expanded to 2.3%, the highest hit 1.3382, the highest since June last year, up more than 300 points from the previous day's closing level. In late New York on Wednesday, GBP/USD rose about 2% to 1.3338.
It has been widely expected that the non-agreement Brexit program will be rejected because most of the members want to avoid the economic uncertainty and trade disruption that may result from the non-agreement of Brexit.
After the announcement of the results of the vote, British Prime Minister Teresa May said that to ensure that there is no agreement to leave the EU, the UK and Europe need to reach a Brexit agreement.
In her speech to the House of Commons, Teresa May said that if a new agreement could be reached in the next seven days, she would ask the EU to make a short-term "technical" extension of the March 29th Brexit limit.
Teresa May claims that if a new agreement is not reached on or before March 20th, a longer extension will be required. The EU summit will be held from March 21st to 22nd.
The British Parliament will vote again on Thursday
According to previous arrangements, the lower house of the British Parliament will postpone the Brexit vote on Thursday in order to obtain better terms.
EU officials have shown more and more signs of anger over the chaotic and confusing stance of Britain's Brexit in the UK. They warned that the EU will not renegotiate the proposed agreement.
Barney, the chief negotiator of Brexit, said before the vote on Wednesday that only Britain can break the deadlock.
According to Xinhua News Agency, Anthony Gris, a political science professor at the University of Buckingham in the United Kingdom, said that if the lower house of parliament voted on Thursday to postpone the Brexit, the UK may break the current Brexit deadlock by means of an early general election or a second referendum.
According to Article 50 of the Lisbon Treaty, the United Kingdom should officially leave the EU on March 29.
British Attorney General Geoffrey Cox said in an interview that the Brexit date was postponed until March 29 and was "inevitable."
British Labor Party leader Corbin said on Tuesday that no agreement on Brexit should be removed to consider one of the options. He also said that it is time to hold a referendum again.
According to Bloomberg, according to people familiar with the matter, British Prime Minister Teresa May plans to ask the EU to postpone the UK Brexit deadline of March 29 for two months. Teresa May is planning to develop the next steps and how to extend the deadline set by Article 50.
Foreign media said the British government sought a third vote on the Brexit agreement
Asian market in early trading on Thursday, the latest heavy news from Brexit: According to the latest reports from foreign media, the British government sought a third vote on the Brexit agreement.
According to The Times, British Prime Minister Teresa May is preparing for the third vote of the Brexit agreement.
In addition, Bloomberg reported that informed sources revealed that the British government sought a third "meaningful vote" on the Brexit agreement by March 20 at the latest.
Bloomberg quoted the Asian Foreign Exchange Report as saying that investors were buying EUR/GBP due to the news. EUR/GBP is currently up 0.4% to 0.8526. In addition, GBP/USD fell by about 0.4% to around 1.3280.
The Brexit agreement of British Prime Minister Teresa May has been rejected by the parliament twice, and the EU has indicated that it will not further negotiate.
The British government earlier said that if it can reach an agreement on or before March 20, it will seek a short extension of Brexit. If there is no agreement, a longer extension is required; the EU will decide the length of the extension.
On Tuesday, the lower house of the British Parliament rejected the Prime Minister Teresa May’s Brexit agreement for the second time with 391 votes against and 242 votes. The gap was 149 votes. Concerns about the Irish border issue in the agreement will result in the Northern Ireland region being left in the EU, and some Conservative MPs and members of the Northern Ireland Democratic Unity Party voted against it.
In the last parliamentary vote, the parliamentarians rejected the agreement of Teresa May with an overwhelming result of 230 votes. This is the biggest failure of the British government since World War II.
How does the pound market go?
Well-known investment bank Goldman Sachs said on Wednesday that the delay in the Brexit process is good news for the pound, as it opened the door for a closer relationship between the UK and the EU.
Goldman Sachs wrote in a report that if the move to extend the Brexit deadline has paved the way for "more modest results," the pound may rise to 0.80 against the euro, which will be the referendum since 2016. The highest level since. It pointed out that more moderate results include customs unions, single market membership or a second referendum.
Goldman Sachs strategist George Cole wrote: “We still believe that once the UK enters the long transition period of exiting the EU, the pound will receive a 'transaction bonus'. Our model shows that the euro still has about 5% of the exchange against the pound. Premium."
Goldman Sachs believes that the most likely case is that the Brexit deadline will be extended to the end of May or early June.
Vassili Serebriakov, macro strategist at UBS Securities, said: "The market is volatile, but investors believe that the situation of hard Brexit in the UK is increasingly unlikely."
Rodrigo Catril, senior currency strategist at National Australia Bank (NAB) in Sydney, said: "We are still optimistic that hard Brexit will be avoided, and we believe this should support the pound."
Nomura's currency strategist Jordan Rochester said: "The pound is now in a range until Thursday's vote to make the plan for the amendment clearer."
Morgan Stanley released a customer report on Tuesday, saying that the latest Brexit progress will help the pound maintain its bullish momentum and will continue to hold a long position in GBP/USD with a target of 1.3650.
Bank of America Merrill Lynch (BofAML) released a research report on Monday saying that the British government has shown its desire to avoid a non-agreement of Brexit, and the pound is expected to rise steadily in the coming months.
Brendan McKenna, currency strategist at Wells Fargo Securities, wrote in a report: "Any sign that the delay in Brexit will become a reality could cause the pound to rise."
Nomura strategist Jordan Rochester said that if Article 50 is extended for a long time, the pound may rise by 1% to 2%. He added that if the referendum is handed over, the pound will rise by 5%.
Jane Foley, head of foreign exchange strategy at Rabo Bank, said: “The fact that the pound has become the best performing currency so far this year proves that investors are looking at Brexit with an optimistic attitude. As long as there is still a sign that the UK will avoid Sterling investors will be encouraged by the option of hard Brexit."
Editor in charge: Dou Xiaowei
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