New Brexit concessions unlikely to be enough to get the deal over the finish line
|Market movers today
-
Today's key event will be the vote in the House of Commons on Theresa May's Brexit deal at 20:00 CET. As of now, we still expect May to suffer another defeat despite the new Brexit deal but it depends on how well it is received, especially by the supporting DUP party (see more under selected market news). We still assign a 15% probability of the deal passing today. If it is voted down, the next step will be for the UK parliament to vote on whether it can support a no deal Brexit tomorrow (see also Brexit Monitor: Brexit goes to overtime, 11 March).
-
In the UK , we also get monthly GDP for January today. PMIs indicate growth remains subdued around 0.0-0.1% q/q in Q1.
-
On the other side of the Atlantic, the day brings February US CPI core numbers, which we expect rose 0.2% m/m, implying a core inflation rate unchanged at 2.2% y/y. Moreover, we will also keep an eye on the NFIB Small Business Optimism Index given the recession fears in financial markets.
-
In the Scandi countries, Swedish inflation numbers for February will be in focus. The Norwegian regional network survey is also due out this morning (see next page).
Selected market news
Late last night, UK PM Theresa May reached an agreement with the EU27 on a new Brexit deal. EUR/GBP fell after the announcement and is currently trading at 0.852, the lowest level since spring 2017. The new Brexit deal gives the UK further assurances that the EU27 cannot keep the UK in the backstop forever by e.g. not engaging in negotiations on the future relationship. Also, the EU27 and UK agreed to speed up the negotiations on the future relationship, which, hopefully, should make the backstop redundant. Juncker said the EU will not negotiate any more.
The big question is whether the new concessions are enough for the hard Brexiteers and the DUP to support her in today's vote. As we have said several times, especially if the DUP backs the deal, it is a potential game changer, as many Brexiteers will likely follow suit. As of now, we have not changed our call that the probability of the deal passing today is just 15%. The problem for Theresa May is her very slim majority. Even if the DUP jumps on board and some hard Brexiteers follow suit, it may not be enough, as some die hard Conservative Brexiteers and Remainers probably will vote against the deal anyway and it is questionable whether she can get sufficient backing from Labour Brexiteers. If the deal is well received, we may change our minds during the day . Our base case remains that May's deal will pass eventually, but given most expect a delay of Brexit, the pressure is still not significant enough.
Otherwise, it is risk-on this morning. Asian stocks are up, as are US equity-index futures. Oil and metal prices are also higher. US 10yr Treasury yields are 1.6bp higher.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.