By Deepta Bolaky
Theresa May suffered the worst defeat in recent times in British history.
The House has spoken, and Theresa May stated that the government will listen. “It is clear that the House does not support this deal, but tonight’s vote tells us nothing about what it does support.” It will be a big challenge for her to negotiate a withdrawal agreement with the European Union if the UK seems confused about what they want themselves.
What’s Next? is the number one question emerging after the big defeat. Labour’s Leader, Jeremy Corbyn has tabled the motion of No-Confidence. Today will be another busy day for Britain:
Out of 650 MPs, Theresa May will require 318 votes to win. The result of the no-confidence vote will determine the next course of action:
At this stage, we believe that the government have higher chances of surviving the vote. The conservative rebels do not want a change of government but want a change of policy rather. It is unlikely that her Conservative Party will risk Labour winning and Jeremy Corbyn becoming Prime Minister.
In the case, the Labour Party fails to trigger an election, they will attempt to seek a second referendum as discussed in my previous article.
Tonight’s No confidence vote will provide more clarity on the next course of action.
In the meantime, we continue to expect wild swings in GBP pairs. The Pound pumped back the heavy losses made against major currencies after the vote, and we believe such volatility is normal given the circumstances and uncertainties grasping the markets around the next steps of Brexit.
However, now that the likelihood of a no-deal Brexit has reduced, giving room to more alternative plans, the direction of the Pound appears less skewed to the downside. A look at the long Doji candle on the daily chart of the GBPUSD pair shows that bulls are providing strong support to the pair.
Source: GO MT4
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.