Prime Minister Theresa May has Parliament's approval to renegotiate the objectionable clauses of the exit treaty with the European Union.  Now that she has been convinced by her own legislature that changes are necessary she has the greater task of convincing the EU that they are warranted.  

Brussels has repeatedly said that the talks that produced the withdrawal agreement cannot be reopened. 

Ms May's 317-301 victory in the Commons on a government backed amendment to replace the Irish backstop with "alternative arrangements" was won with the votes of Eurosceptic Conservatives. They fear the backstop would turn into a permanent trade and customs arrangement with the EU. 

Donald Tusk, the President of the European Council, the executive arm of the European Union has said time and again to all who will listen, that the Brexit deal cannot be amended.  “The backstop is part of the withdrawal agreement and the withdrawal agreement is not open for re-negotiation, said Mr. Tusk’s office.

Ms May’s ability to convince the national leaders behind the EU Council, primarily Angela Merkel in Germany and Emmanuel Macron in France that an altered agreement is better than the alternative may depend on her ability to effectively prepare her nation for something that she and Parliament have said they would not allow, namely a no-deal exit.

Britain can end its association with the EU on March 29th without replacements for the trade, financial and political agreements that have grown up in the 44 years of EU membership.  The world will not end. The logic of economic reality will swiftly assert itself. But it will be very tumultuous and every problem and cost will be magnified by Brexit’s opponents many of them in the media. Is this a course Ms May will take?

Without believing that the UK will risk the economic, financial and political turmoil, even if temporary, of a non-negotiated exit, what motive does Paris and Berlin have to accede to British demands?

If the EU refuses substantive changes to the Brexit accord, modifications that will permit passage in Parliament, what next? It appears the EU Council believes and no doubt hopes that Britain will ask for a delay of the departure date.  They almost seem to encourage it.  From there all futures are open, even the preferred one of a second referendum and an end to Brexit.

From the reaction to the vote in Parliament markets are unconvinced that Ms May has grasped the essential point that her only real leverage on the continent is the threat of a no-deal exit.  Sterling fell about a figure, an inconsequential drop if the Commons vote really brought a non-negotiated exit closer.

Chart: FXStreet

An unmediated British departure from the EU would cause as much turmoil in the European economies as in UK.  European Union countries, notably Germany and France sell far more to England than she sells to them.   Were no-deal on the horizon the euro would be under as much pressure as the pound. After today's vote the euro rose.

Chart: FXStreet

The Prime Minister may not want to leave the European Union with a curt goodbye. But until she turns her back and starts to walk away no one will believe she intends to go at all.   

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD rebounds after dismal US PMIs

EUR/USD is trading closer to 1.0850, rising in response to weak US PMIs, with the services one pointing to contraction. Earlier, German Manufacturing PMI beat estimates. 


GBP/USD advances to 1.2950 after US data

GBP/USD is trading around 1.2950, taking advantage of US weakness stemming from a downfall in Markit's Services PMI in the US. In Britain, the Manufacturing PMI exceeded estimates. 


Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Consolidation process underway

The Crypto board continues to be immersed in an emotional leg-breaking, consistently punishing the emotional state of the traders with its continuous changes of direction.

Read more

XAU/USD unstoppable, breaks to fresh 2020 highs, approaching $1650/oz

XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitting $1646.64 per ounce on an intraday basis.  

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors