Parliament voted to hold indicative votes on Wednesday, March 27th. How can this play out for the pound?
Here is their view, courtesy of eFXdata:
MUFG Research discusses the latest Brexit vote developments.
“The indicative votes will not be legally binding on the government but will increase pressure to implement the will of Parliament if it helps to avoid a disorderly “No Deal” Brexit. We see the two most likely outcomes as i) there is no clear majority for a single outcome which would extend the current deadlock and ii) that a majority of MPs back a softer Brexit,” MUFG notes.
“At the current juncture it is highly uncertain how things will play out, but the market is continuing to take an optimistic view that Brexit is heading towards a longer delay and a softer outcome which has encouraged a stronger pound at the start of this year. At the same time though the rising risk of a general election and a “No Deal” Brexit remain potential banana skins for the pound in the near-term. We are more confident that pound volatility should remain elevated,” MUFG adds.
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