UK: How a second referendum could happen? – ABN AMRO

Sandeep Kanihama FXStreet Contributor

Bill Diviney, senior economist at ABN AMRO, points out that UK Prime Minister Theresa May presented her ‘Plan B’ Brexit proposal and after having given up on cross-party solutions to the parliamentary deadlock over Brexit, her latest move is aimed at bringing the right flank of her party on board.

Key Quotes

“We believe this approach will fail, for two reasons. Firstly, Ireland has flat-out rejected any renegotiation of the backstop. Secondly, even if a renegotiation on this point were somehow successful, it is unlikely the entire Conservative Party would back the deal, nor (potentially) the DUP. Given the government’s slender majority, the risk that it does not pass looks high.”

“While the Prime Minister expressed scepticism over a referendum in her statement, she did not rule it out either. Much will hinge on whether the Labour Party officially comes out in favour of a second referendum in the coming days, now that the chances of the alternative – a cross-party consensus for a soft Brexit – have fallen.”

“Should Labour’s position shift, the next step would be the party voting in favour of a Referendum amendment to May’s Plan B motion on 29 January. While the vote could be a close one, this would send a strong signal to the Prime Minister on the strength of support for a referendum.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD clings to daily gains, still below 1.1900

EUR/USD manages to reverse two daily pullbacks in a row and advances modestly on Thursday, hovering around the 1.1880 zone amid the inconclusive price action around the US Dollar. Meanwhile, weekly Initial Claims rose more than expected last week, while attention is expected to shift to the upcoming US CPI data on Friday.

GBP/USD picks up pace, hits 1.3640

GBP/USD trades with modest gains around 1.3640 so far on Thursday. Indeed, Cable looks to leave behind the weakness seen in the first half of the week in a context of an equally erratic performance in the Greenback and disappoting UK data releases.

Gold stays offered below $5,100

Gold keeps the choppy trade well in place on Thursday, navigating the area below the $5,100 mark per troy ounce amid the lack of clear direction in the Greenback, declining US Treasury yields across the curve and caution ahead of Friday’s publication of US CPI.