Today, late in the evening (approximately at 19:00-20:00 London time), there will be another "decisive" vote on Brexit in the British Parliament. It is difficult to calculate how many such votes have already been in the last few years: in each case, the deputies and members of the government tried to unravel the tangle of contradictions, which became more complicated from year to year. And now, the parties approached the "barrier" again: today, the British parliament will either give the "green light" to the future deal or launch an alternative scenario that involves a postponement of Brexit, re-election and (possibly) a referendum on the terms of the new agreement. Given such an eventful crossroads, we can say without any exaggeration that the echoes of today's vote will be felt by traders of the GBP/USD pair for several months.
In anticipation of key events, the pound paired with the dollar behaves accordingly: retreating from the achieved highs, it froze in anticipation of the parliamentary verdict. On the eve of such votes, the British currency, as a rule, loses its positions, as many traders are reinsured by closing long positions. But in recent days, events alternate with kaleidoscopic speed, so the pound does not have time to follow the news flow.
The fact is that quite contradictory information has surfaced in the British press regarding the prospects for voting: according to an insider of some journalists, Johnson will find support among some Labor who are willing to negotiate a deal with Brussels – even at the cost of "political dissent." The number of such labor members who are willing to go against the party's general line varies from 19 to 50. The position of the Democratic Unionist Party is also unclear – according to official information, representatives of the Northern Irish refused to vote for the deal, but according to unofficial information, negotiations on this matter are still ongoing. Therefore, it is not at all excluded that the unionists will eventually agree with the general principle of the proposed bill. In other words, the intrigue regarding the evening meeting persists.
It should be noted that Johnson wanted to hold a "signal" vote yesterday, but Speaker Bercow blocked this attempt. According to him, the law does not allow repeated voting on the same issue (if the circumstances on this issue have not changed significantly). Therefore, the prime minister changed tactics – he again proposed the same deal, but in the complex 110-page bill. Today's parliamentary debate began this afternoon, while by 21:00 the deputies should answer the main question: whether they approve the basic principles of the proposed deal or not. If the answer is yes, parliamentarians will go further in the procedure by voting for the schedule for considering the bill. In the case of a negative answer, such procedural maneuvers will already be inappropriate.
It is too early to talk about further scenarios. If the deputies nevertheless say a preliminary "yes," they will continue to discuss the 110-page document. Johnson's government insists that in this case, it is permissible to consider the bill within three days, although, as a rule, much more time is allocated for the consideration of international agreements of this level – at least three weeks. Many deputies (primarily Labor) insist on a full review procedure, so if their demands are supported by a majority, then Johnson will be forced to request technical delay from Brussels. However, if the deputies fundamentally agree with the deal, this delay will no longer be of fundamental importance.
It is much more difficult to predict the development of events if parliamentarians fail the deal today. On the one hand, Boris Johnson has already sent to Brussels a request for a delay. On the other hand, he did not sign this letter, having sent "after" the second appeal of a personal nature – with the opposite request. The EU leadership is ready to "turn a blind eye" to the personal opinion of the British Prime Minister – Europe is set to continue the negotiation process, especially since the formal grounds for this already exist.
But these are the events of the following days. The reaction of the pound in the short term (today – tomorrow) will depend on the results of today's vote. In the case of a positive answer, the pound will again go to storm the 30th figure (and very likely consolidate in the range of 1.3020 – 1.3090). Otherwise, a fairly significant price pullback will follow, at least to the base of the 25th figure. It is too early to talk about lower values: in any case, the probability of a "hard" Brexit on October 31 is now minimal (given the position of the British Parliament and Brussels), so the worst-case scenario for the pound is unlikely to be realized in the near future, at least until the end of the year. This fact will provide background support to the British currency, as they say, "in any weather."
